While redevelopment and ground-up development are two distinct processes, they both attempt to change a plot of property such that a tenant can inhabit it. Both new construction and redevelopments help their communities by bringing in new businesses.
Let’s look at the distinctions between new construction and redevelopment and weigh the advantages and disadvantages of each.
Ground Up Development:
Projects that start from scratch are interesting because they provide much flexibility and may be customized to the end customer’s demands. Developers oversee these projects from inception to completion, from purchasing the property to building the structure.
Pros
- Developments from the ground up provide the most flexibility because they may be totally tailored to the end customer’s needs. An owner-user can construct their ideal workplace, or a developer can create a tenant’s exact requirements.
- Modern materials can offer lasting value and demand minimal upkeep over a property’s lifetime. However, sometimes these solutions can be as straightforward as optimizing natural light through window panels to save money on electricity. One innovative technology that helps tenants save money is solar energy.
- If properly planned, ground-up development can be a very profitable sort of investment. Together, the renter and developer may create something completely unique that will benefit the neighborhood and ultimately improve it.
- Construction involves less risk than redevelopment, which may have hidden expenses. An assessment of the site for a renovation may turn up numerous problems that could become financially unmanageable.
Cons
- Most of the time, new construction will require more time than renovation. The process takes longer to complete since there are more processes involved. Before they can even begin building, those interested in ground up development must conduct rigorous due diligence and secure licenses.
- Because you can’t reuse materials and the structure needs to be constructed following current codes, it is typically more expensive. Redevelopments are not necessarily required to follow current codes, which cities demand for new construction projects.
- Ground-up building depends on the time of year and the climate. Wind, snow, and rain can arrive suddenly and create delays and physical harm. It will be necessary to arrange the project timeframe properly, and weather delays should be carefully considered.
- Because it involves pre-development processes when project sponsors need out-of-pocket costs to fund due diligence and permitting, it may present financial issues and potential risk.
Redevelopment:
Redevelopment is the reuse of a previously established site. It can boost a community’s economy and increase the property’s value. Redevelopment frequently starts with evaluating the building’s existing state and prospective future uses.
Pros
- Redevelopment is typically seen as being less expensive than starting from scratch because more minor construction is required since some of the site preparation and building structure will be recycled. Making changes also takes less time than beginning from scratch. To revitalize the site, redevelopment typically keeps some of the original development, such as parking spaces, plumbing, or building structure.
- A property that has been developed grows in value and stimulates local economic activity. Redevelopment is the process of replacing an outdated structure with a brand-new one. One renovation can bring in new industry and open doors for other projects in the neighborhood.
- Because materials are reused throughout the redevelopment, a property becomes more sustainable. The property’s overall sustainability would rise if the pavement could be preserved and tree removal wasn’t necessary.
- Cities frequently prefer redevelopment, particularly if it takes place in an urban or dilapidated location; therefore, the permitting procedure for redevelopment can be sped up. The city takes this action hoping that the renovated business would improve the neighborhood’s aesthetics and enhance tax revenue.
Cons
- Due to needing to deal with the structure and lot size, redevelopments may not be able to be personalized the way from the ground up developments are. Instead of starting from scratch, a developer will have to work with the building’s existing structure.
- Sometimes, it might not be the wisest financial move. After the destruction, structural problems can be discovered, necessitating additional work to restore the building to a habitable state. Depending on how old the property is, zoning regulations may also need to be revised or updated, and the property may need a sizable amount of technical updates.
- It’s possible that a property can’t be transformed into what the developer and tenant want. The property might not have the features the tenant needs to operate their business and be functionally outdated. It’s sometimes wiser to tear down everything and start again.
- Properties may occasionally be designated as having historical or cultural significance, restricting their potential for redevelopment. Historic buildings must be preserved and kept as close to their original design and construction as feasible. A redevelopment may be blocked or put on hold if a structure is deemed historic.
The merits and prospects of a property are usually considered when deciding between new construction or redevelopment. Before making a choice, be prepared to consider various aspects because that choice will have an impact for a long time. Self-research can be difficult and time-consuming. Your greatest option is to collaborate with an experienced chosen developer who is capable of handling a variety of different duties. For additional information on our development experience, click here.
Summary:
Ground-up development and redevelopment both aim to provide tenant-ready space. Both new and refurbished areas draw commerce.
Property attributes and possibilities dictate whether to build or renovate. Your choice will have lasting effects, so think carefully. Self-research takes time and is hard. It’s best to hire a suggested developer who can manage multiple duties.
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