Adaptive Reuse Resource Guide

ADAPTIVE REUSE RESOURCE GUIDE

Current Industry Challenges

Commercial Real Estate is undergoing a seachange in the wake of the COVID-19 pandemic and changing economic conditions and changes within traditional lending markets. Many companies transitioned to remote work and reduced their office footprints. Shopping malls are losing anchor and smaller tenants resulting tremendous losses of revenue. Educational institutions have found that they lack enough space for the influx of new students and space to conduct research. Work from home has made multifamily owners reassess the amenity mix that they are offering through their properties. Hospitality owners are looking at ways to ensure safety and wellbeing under the umbrella of their individual brands.

The way we work, live, learn and shop today looks dramatically different from the past. Commercial Real Estate Asset Owners are looking for alternate ways to remain relevant to protect their investments now and into the future. Many asset owners are exploring Adaptive Reuse to reimage their property assets and how they can ensure that those properties remain financially viable in today’s changing commercial real estate environment.

According to a study by the Commercial Real Estate Development Association (NAIOP), office vacancy rates in the United States reached more than 17% in the third quarter of 2022, the highest level since the early 1990’s. Ensuing concerns for all property owners include:

96 Billion Square Feet of Commercial Floor Space in the US

5.9 Million Commercial Buildings in the US

61%

49%

Percentages used for Education, Mercantile, Office, Warehouse / Storage Use

*Sourced from The University of Michigan – Center for Sustainable Systems

INCREASED VACANCY RATES:

As businesses close or reduce their operations, the demand for commercial space declines. This led to an increase in vacancy rates and declining rent revenue particularly in the office and retail sectors.

DECLINING RETAIL PRICES:

As vacancy rates increased, landlords were forced to lower rental prices to attract tenants.

INCREASED DEMAND FOR FLEXIBLE LEASING OPTIONS:

Tenants became more interested in flexible leasing options, such as short-term leases and subleases, as they sought to reduce their risk in the uncertain economic environment.

FOCUS ON HEALTH AND SAFETY:

Tenants and landlords placed a greater emphasis on health and safety measures, such as enhanced cleaning and air filtration systems.

SHIFT TO REMOTE WORK:

The pandemic accelerated the trend towards remote work which has lowered demand for designated long-term workspaces but raised the demand for short-term hoteling workspaces.

Approach

CJ+C’s approach to Adaptive Reuse begins with working with our clients, developers, and brokerage partner teams to help them determine if Adaptive Reuse is the appropriate choice for their goals. Many components affect this decision: anticipated programmatic and user needs, existing floorplate configuration, fenestration, column grid, existing mechanical, electrical, plumbing, structural integrity, site constraints or opportunities, parking – or lack thereof, historical designation, cultural significance, city zoning, and city, state, or federal incentives for building reuse or reclassification.

When changing the programmatic/established use of the building, the interior configuration, demising walls, building access, and site are likely to change. Our goal is to reimage the building to match the new needs without interrupting the existing structural integrity or core components like the elevator shafts, exit stairs, and column grid.

Since one of the major benefits of Adaptive Reuse is material and cost savings, we strive to reuse as much of the building as possible either through restoration and repairs or through material recycling. This fact paired with other approaches make any Adaptive Reuse project a great candidate for LEED or WELL Certification .

Altering the use of the building will require working with the city to adjust understand existing zoning and possible rezoning of the asset, especially if a mixed-use project is being concerned. Our team can also help our clients explore if any local, state, or federal incentives exist and how they would apply to the project or enhance the overall scope of the initiative. Fortunately, our team has extensive experience navigating conversations with local and federal jurisdictions that will benefit the project.

Typically, CJ+C is seeing Adaptive Reuse in the following scenarios:

Benefits to Adaptive Reuse

PRESERVING CULTURAL HERITAGE AND HISTORICAL VALUE

Reinvigorating established cultural centers rather than tearing the building down is supported and celebrated by local government and community members.

INCREASED POSITIONS FOR REFINANCE

You may be able to sell the building later for more than what you initially paid.

ACCESS TO LOCAL, STATE, AND FEDERAL FUNDING AND TAX INCENTIVES

Certain Adaptive Reuse projects can be candidates for additional funding by various judicial municipalities. One example is California AB 1532 which provides special incentives for Office Building to Affordable Housing Residential. Another is a Federal Program entitled Historic Rehabilitation Tax Credit available in all state’s coast to coast.

HIGHER ENERGY EFFICIENCY

Older buildings when retrofitted during the adaptive reuse process often achieve higher efficiency standards.

INCREASED RETURN ON INVESTMENT

Create a new revenue stream when your original investment runs its course.

INCREASED LONG TERM OCCUPANCY

There is a waiting period of ROI, however once the project is completed one can project expected increased revenue.

EVERGREEN

Reusing buildings reduces embodied carbon and lowers the need to source, process, and transport raw materials. Adaptive Reuse is environmentally friendly that leans itself well to LEED or WELL certification.

INCREASED BUILDING LIFESPAN

Typical building lifespans are approximately 50-60 years with proper upkeep and updating. Adaptive Reuse projects can increase this lifespan and allows for additional ROI over a longer term.

ADDITIONAL SOURCES

https://www.nmrk.com/insights/real-insights/obsolete-officeproperties-are-being-successfully-converted-into-multihousing

https://www.nmrk.com/insights/press-releases/newmark-knightfrank-arranges-23-million-sale-of-adaptive-reuse-and-creativeoffice-building-in-los-angeles-west-adams-neighborhood

https://www.connectcre.com/stories/newmark-arranges-sale-ofsan-pedro-adaptive-reuse-site/

https://www.arborcrowd.com/real-estate-investing-learningcenter/adaptive-reuse-real-estate-investments-rise/

https://www.us.jll.com/en/views/three-major-benefits-ofadaptive-reuse-in-real-estate

https://business.cornell.edu/hub/2023/07/06/adaptive-reuseconverting-empty-office-space-housing-viable/

https://business.cornell.edu/hub/2023/06/26/what-do-emptyoffice-buildings-mean-economy/

Workplaces

Most Adaptive Reuse projects generally start as an Office property being converted to another programmatic use. Office Adaptive Reuse also applies to refurbishing an existing Class “B” or Class “C” office asset into a new Class “A” office asset through property refurbishment that will extend the life of the property, prepare the asset for sale or refinancing, or increase occupancy over time providing increased revenue. We are seeing this in most cities with signature skyline defining property with a desirable address nearing the end of its lifespan. This now applies to any signature building created in the 1960’s or 1970’s.

This may be completed by refurbishing or upgrading the building’s skin, structural, mechanical, electrical, plumbing, parking, and or a mixture of other factors.

Typical building lifespans are approximately 50-60 years with proper upkeep and updating. Adaptive Reuse projects can increase this lifespan and allow for additional ROI over the longer term. Many asset owners at the same time look upgrade and increase the building’s amenity mix with upgrades of common areas, outdoor spaces, building lobbies, and parking structures.

When considering changing the Buildings Asset Class several considerations determine if the project to be viable. Building Location (Central Business District or Suburbs), surrounding community growth and neighboring developments, rent rates of neighboring properties, tenant mix (large verses small leases) building occupancy rate, length of long-term leases (10 years and over) and age of infrastructure (elevators, mechanical, electrical, plumbing) all need to be considered in a feasibility study. In addition, asset owners need to consider the price of land that the building sits on and if there are any environmental concerns with asbestos or other ecological containments present.

BEFORE AFTER

Tower 180

Although situated in a prime location in the heart of Downtown San Diego, this existing tower was hampered by its dated façade, tired common areas and lack of robust amenity spaces. Our architectural, interior, and landscape design teams worked together to harness the potential of this building to make it a desirable asset for its owner, converting it to a Class A office tower.

With respect to the original facade, we enhanced the vertical language of the exterior with a new curtainwall system and metal fins. The vertical lighting along the metal fins is reinterpreted inside with museum-like lighting in common areas that creates opportunities for art displays, similar to high-end galleries. Common areas are infused with unique, one-off details such as custom furniture and fireplaces. Accompanying the improved street frontage and common areas is a 13,500 SF roof deck terrace that offers building users elevated views of downtown.

Is Your Asset Right For Adaptive Reuse?

LET CARRIER JOHNSON + CULTURE ASSIST IN YOUR FEASIBILITY STUDY

When entertaining the idea of adaptive reuse or conversion of an existing building, there are several factors that are important to consider first.

Location

Does the neighborhood offer amenities that support your desired program?

Residential buildings should be located near grocery stores, day care facilities and schools. Office buildings should be located near eateries, fitness centers, and mass transit.

Neighborhood Growth

Is your site in an area that is experiencing or about to experience growth? Will new developments support your envisioned program?

Accessibility

Older buildings are not built to modern code. Circulation paths typically need to be updated for buildings older than 20 years.

Area Rent Rates

Based on your site’s location, neighboring rental rates and vacancy rates, what can you reasonably charge tenants for rent?

Vacancy Rates

Look 5, 10, and 15 years out. An uptrend in vacancies means your building might not be good candidate for adaptive reuse or conversion.

Parking

Does your building accommodate EV parking spaces and charging ports?

Can the parking deck structurally support electric vehicles? Can you feasibly insert charging stations?

Building Amenities

If converting part of an existing building, does that building offer amenities that support and appeal to future users?

Building Height

Low rise buildings are typically designated for single use, whereas high rises accommodate more programs, which requires division of those programs (secure entries, divided elevator cores, etc.)

Building Systems

The age and capacity of your building’s core, infrastructure, and MEP systems will determine if you need to replace or upgrade those systems.

Community Connection

Can your building appeal to the community for special occasions? Can it serve as an event venue? Can it host retail pop ups? Will there be a publicly accessible entry or street front retail?

Floor Plate

Conversions are difficult for large, expansive floor plates. Spaces deep into the floor plate don’t receive much daylight access – a particular challenge for residential use.

Greenspace

Opportunity for terraces and parks differs based on city regulations of set backs.

Fenestration

Not all buildings have operable windows, though residential buildings require them. Different building types allow for different structural bays; the exterior building façade may not align with your desired interior program type

Entries

Does your building have appropriate security and number of entrances for your new users?

City Regulations

What zoning and permitting challenges will you face for conversion?

Deck Height

13’-6” is typical for residential buildings but not for other building types. Will your building accommodate required mechanical systems with its existing deck height?

Tenant Mix

What are the size of vacant spaces?

Are they anchors or small leases?

Regional Demand

What building type is in the most need within the community?

Currently, office buildings are in decline, but affordable housing and research spaces are in demand.

Environmental Challenges

Will you face seismic, or site remediation or abatement challenges?

Incentives

Are there tax incentives for the project type? Many communities give incentives to salvage and reuse buildings, which means cost savings for you.

Historical Cultural Value

Some cities also prioritize the reuse and preservation of buildings with historic and cultural significance.

Cost Comparison

Is the land worth more than the reuse investment? What will your economic return and timeline be? Are the upfront planning costs more than that expected return?

CORPORATE TO HOSPITALITY CASE STUDY

LAX Hyatt House-Hyatt Place

The LAX corridor is the gateway to Los Angeles and offers a fun layover or a home base for further travels. The LAX Hyatt House/ Place is a new addition to the corridor consisting of a renovation/ conversion of an existing 13-story 1960s office building.

The character of the 1960’s building’s architecture and historical office environment plays a role in the essence of the interior design. A mix of bold accent colors, statement furniture pieces, and mixes of rich materials elevates the design concept.

The proximity to the international airport adds a dynamic and adventurist quality to the concept approach, resulting in unexpected designs solutions integrating masculine characteristics sprinkled with feminine accents. The ground level of the building contains the main amenities such as the lobby, reception area, lounges, F&B outlets, multi-function rooms, and guest services.

SCOPE OF WORK

The lower level was modified to include meeting space, fitness center, staff spaces, prep kitchen for the meeting room and back of house laundry and storage rooms. Work on the main lobby level included dining and bar areas, full-service kitchen, business center and lounge area. A penthouse level was added which included a pool deck, a second restaurant/bar area and kitchen. The entire electrical, mechanical, and plumbing in the building were replaced for the new hotel use.

CHALLENGES

+ Although there was a change in occupant type, the project was able to reuse the existing egress stairs with some modifications.

+ Existing elevator shafts were re-used and in some cases lengthened to extend to the lower level and new penthouse.

+ A fire in the LADWP electrical vault room at the start of construction required the electrical system be redesigned to compatible with more robust switch gear.

+ Two atriums were cut into the building to allow additional guest rooms to be in the center of the building. The atriums required an extensive smoke removal system for building safety.

+ The building’s concrete waffle slabs were not in alignment from floor to floor, causing re-design of several bathroom stacks to thread the plumbing down through the building during construction.

Solara Lofts

This mixed-use project converted an existing, underutilized office building into a contemporary residential condominium project. Offering unique views of the San Diego bay, Balboa Park and the city skyline to the south, the project was the first phase of a potential three-building complex. Phase two anticipates a high rise condominium tower on the southeast corner of the same fullcity block, and phase three is planned to utilize the northeastern section. The eight-story building now includes a day spa for residents, a racquetball court, a fitness center with showers and a sauna, and resident storage space.

HP INVESTORS Block D

Carrier Johnson + Culture completed a feasibility study and unit test fits for an office-to-residential building conversion in downtown San Diego. Our test fits explored options for inserting 45 studio, one- and two-bedroom units on levels two through six in the existing building shell while reserving the ground floor for multiple retail tenants using a live-work arrangement.

PROJECT TYPE

Infirmary to Higher Ed + Labs LOCATION

Claremont, CA SCOPE

Adaptive Re-Use Programming

Architectural Renovation

Interior Renovation Site Improvements SIZE 12-acre site

10,500 SF Interior Renovation

3,000 SF Exterior Renovation

CONSTRUCTION COST

$5,400,000

COMPLETION 2018

AWARDS:

+ American Institute of Architects (AIA) Los Angeles, Design Award

+ Committee for the Environment (COTE), Merit Award, Claremont

Heritage, Preservation Award

Robert Redford Conservancy

Located on 12-acres across the main campus of Pitzer we renovated and repurposed an existing infirmary building as the Robert Redford Conservancy (RRC) - a facility containing science classrooms, offices, laboratories, meeting rooms, and an art studio. The renovated building is the first higher education building in California and the fourth in the world to be Zero Energy certified by the International Living Future Institute. With its inherently passive design and extensive natural landscape, the RRC is a destination which recognizes the past, educates about the present, and fosters collaborative learning across disciplines in a dynamic space for the future.

+ USGBC LA Chapter, Project of the Year and Honor Award (SIA Energy

+ Atmosphere category) Before

International Language School

The Education First project involved redevelopment of the former Cabrillo Hospital site in the Midway area of Point Loma, acquired by Education First. Carrier Johnson + CULTURE re-designed the existing building into a new EF International Language School campus. The new facility of 183,000 sf will accommodate 600 students living on-site, inclusive of dormitory rooms, a full service cafeteria, classrooms, an exercise & yoga center, a projection room with theater-style seating, and laundry area. The site will also be re-designed to incorporate a soccer field, tennis courts, pool and open patio areas, with full landscape.

Before

CO-MERGE

Flexible Downtown Office

Co-merge launched their flexible hoteling office concept in a one-story 1965 building in downtown San Diego’s Civic Center area that sat empty for 15 years. The revitalization of the building included an exterior face lift and full interior renovation, including asbestos abatement, transforming a vacant property to a hip alternative office environment. Co-Merge also offers multiple levels of outdoor space – a green front “porch” and rooftop garden, enabling members to feel part of the activity generated from the urban surroundings without leaving the grounds. The project was designed with eco-friendly features in mind such as use of materials with high recycled content, daylighting strategies, and water conservation through use of drought-tolerant landscaping.

PROJECT TYPE

Vacant to Co-Work Space

LOCATION

San Diego, CA

SCOPE

Interior Design

Signage + Wayfinding

COMPLETION

2011 SIZE

9,00 SF

AWARDS

+ Orchids + Onion Winner for Adaptive Reuse

“The design team took a horrible building and, utilizing space, light and color, transformed it into something special.”

- Union Tibune October 27, 2011

PROJECT TYPE

Police Headquarters + Jail to Retail + Hospitality

LOCATION

San Diego, CA

CONSTRUCTION COST

$17,200,000 SIZE

100,000 SF

4 Buildings SERVICES

Historic Restoration Architectural Addition COMPLETION 2013 AWARDS

+ Orchids + Onions Winner for Adaptive Reuse

+ AIA San Diego Hisotric Preservaiton Award

+ Save Our Heritage Origanization People In Presrevation Award for Commercial Renovation

TERRAMAR

The Headquarters at Seaport Village

This site had sat vacant for over 25 years and is on the National Register of Historic Places, which added to the challenge of transforming the 1930s police headquarters into a collection of 30 upscale shops and restaurants. We developed a strong relationship with the Port of San Diego and State Historic Preservation Office to identify historic elements to be kept and restored and design strategies for non-historical additions. To maintain the Spanish Colonial style we reused 27,500 roof tiles, large ornate wood doors, ironwork, light fixture and skylights, windows and 15,000 sf of historic courtyard pavers. We opened up the building with courtyard and interior spaces to accommodate the site’s new life as a pedistrian-focused retail district.

Stay Open Micro Hotel

CJ+C completed schematic design of a commercial space-tohotel conversion on a 3-acre site near the San Diego airport. The existing District Annex Building was reimagined as a low-cost micro-accommodations lodging facility with a lobby, bar, and daylit atriums. Our design extends the existing floor plate and adds a second story to create space for an additional 12 rooms along with an activated rooftop.

Rooms can accomodate 8 to 12 people, each with their own POD, with shared shower and bathroom facilities. Private rooms are available at a slightly higher price point. The site’s proximity to the airport and rideshare options makes it ideal to house a hotel while mitigating traffic congestion and the need for parking.

Restricting this design to the annex building leaves the adjacent 2-acre parcel available for additional redevelopment that would compliment the new hotel.

before

SRO HOUSING CORPORATION

Panama Hotel

The Panama Hotel serves the housing needs of a transient population of seasonal laborers, emergency shelter for homeless people and others on the margins of society. The new renovation/ conversion from historic hotel to affordable housing provides a safe, comfortable, and sustainable environment while respecting the historic character of the existing structure. Our tema worked to restore features of the building’s brick envelope, removed the interior system of floors, walls, and roof, and provided a new structure within the existing envelope that improves the acoustic, thermal, and structural performance of the building.

The original 1920 Panama hotel had 219 boarding room units comprised of a single room with sink, bed, dresser, and table with shared bathroom facilities off hallways. These were converted to 72 units with individual bathrooms, small kitchenettes and closets.

BRIDGEPOINT EDUCATION

University Of The Rockies

Overlooking Denver’s famous tree-lined outdoor pedestrian promenade on 16th Street, the new University of the Rockies instructional facility and administrative headquarters is housed within the shell of a what was once a department store anchoring the Tabor Center retail mall.

The primary goal of this project was to increase the University of the Rockies’ instructional capacity and physical presence for its School of Organizational Leadership and to consolidate the University’s administration into a new central headquarters and learning center that would showcase the institution’s unique identity and redefine the graduate school experience for students specializing in social and behavioral science.

PROJECT TYPE

Retail Mall to Academic Offices LOCATION Denver, CO

Interior Architecture

Interior Design FF&E Environmental Graphics

PROJECT TYPE

Commercial to Mixed-Use Residential

The Village at Totem Lake

An aging 26-acre regional shopping mall sat at the edge of Kirkland’s metro area, the adjacent forest, and Totem Lake. The mall faced a fate similar to that of many other American shopping malls; its popularity steadily declined over the past twenty years as it lost tenants and visitors. Much of the property sat vacant for over a decade. The developers aimed to create a walkable village that reflects the surrounding wooded landscape, fosters a sense of community that is unmistakably rooted in the PNW, and revives an undesirable area back to its height of civic importance.

The redevelopment maintained retail establishments at the ground level with an enlivened pedestrian experience. A new urban promenade now centers the village and leads towards a green plaza accented with hard and softscapes. The residences above boast a variety of unit types and views overlooking the streetscapes below and land and city scapes beyond.

Before Diagram