Summary: New projects arose as technology and construction advanced, leaving older buildings unoccupied. Redevelopment is a fast-growing method of commercial and community development. Is it for you, though?
New developments emerged as technology and building techniques improved, leaving older structures abandoned in the wake of progress.
Reuse and redevelopment have become desirable, or even necessary, due to population shifts from cities to suburbs to suburbs to cities and back again. Buildings that were previously the hub of activity were deserted.
However, many of those structures have found new life or might do so in the future. In the upcoming ten years, it is predicted that 90 percent of construction work will be done on already-existing structures. Additionally, there are a few significant causes for the increase in commercial redevelopment.
“What’s Old Is New Again”
In comparison to changes in population and consumer behavior, the retail sector gained substantially too much square footage in the 1990s and early 2000s.
In many U.S. metro regions, changes in retail square footage did not correspond to changes in consumer purchasing power. The U.S. became “over-retailed” at that time due to development and the economic slump in the late aught.
However, this is the point at which redevelopment becomes valuable. Despite many stores closing their doors, the utilization of existing, vacant facilities and a decline in new developments are helping to keep vacancy rates low.
Cities Adore Recycling
As reuse and redevelopment projects lessen blight and rejuvenate homes with declining value, cities have grown increasingly amenable to them.
Numerous communities have implemented or are implementing adaptive reuse incentives or programs to support redevelopment, speed up the approval procedure, relax zoning and code constraints, and provide financial benefits.
Cities like Tempe, Arizona, for instance, have implemented adaptive reuse programs that, among other advantages, seek to:
- Make one point of contact.
- Alter the landscape requirements.
- Adapt parking regulations.
- Adapt lighting regulations.
- Standardize mechanical screening differently.
As a kind of public financing, cities also use tax increment financing, or TIF, to support redevelopment, infrastructure, and community improvement initiatives. With this incentive, a portion of a company’s taxes is either refunded or used to fund a project.
GPLET, also known as the Government Property Lease Excise Tax, is another tax in addition to TIF. This is a further incentive for redevelopment because it lowers project operational costs by substituting an excise tax for the real property tax.
Gaining Favor and Reducing Blight
People are proud of the places they call home and feel connected to the history and tradition those places contain.
People are interested in comeback tales, regardless of the age of the structure (60 or 20 years). Through revitalizing and preserving existing structures, redevelopment plays a significant part in those tales.
Old, decaying buildings are given new life through redevelopment efforts, which also raise property prices. As a result of the positive economic impact these projects have, there is less public scrutiny.
A community can actively take advantage of the advantages of economic expansion through the adaptive reuse of buildings.
Not everyone should participate in rebuilding initiatives, though. They have their own limitations and restrictions. Additionally, recent construction can considerably boost a community’s economic development. Simply put, redevelopment is a distinctive, quickly expanding approach to business development and neighborhood revitalization.
******************************
Come join us! Email me at mark@dolphinpi.us to find out more about our next real estate investment.