Construction Today 2018 - Volume 16, Issue 3 - 8
GIVING NEW LIFE
Adaptive reuse offers advantages to ground-up construction. BY BILL WILHELM
reuse has been
employed for many projects,
daptive reuse refers to the redevelopment or use of an old site
or building for a purpose other
than what it was originally built
or designed for. In certain cases, it offers
a cost-effective alternative to ground-up
construction. The practice has been employed for a wide range of different types of
commercial construction projects, including
multi-unit housing, retail, office and even
museums and Major League Baseball parks.
One asset class where adaptive reuse has
been especially fruitful in the last few years
is hotels. A primary reason is that adaptive
reuse or renovation allows the property to
go to market 20 to 30 percent faster than an
equal size ground-up. For hotels, that time
savings accomplishes several things:
* Puts "heads in beds" faster - Hotels can
CONSTRUCTION-TODAY.COM VOLUME 16, ISSUE 3
become operational more quickly, start making money sooner
and pay back investors more rapidly. Plus, there is an opportunity cost of reducing months from the construction schedule
compared to a ground-up build.
* Saves costs - Traditionally, adaptive reuse costs about 20 percent
less than the cost to construct a similar caliber of building from
the ground up.
* Hedges against market changes - Labor and materials costs
change regularly. Sometimes, it is eye-opening to look back over
historical data from prior construction projects to see how much
the costs on certain materials rise or fall, depending on the timing. Compressing the construction schedule through adaptive
reuse mitigates the risks associated with market upturns or
downturns that affect labor and material costs.
Where Adaptive Reuse Makes Sense
To be clear, adaptive reuse does come with its own set of challenges.
But under the right circumstances though, the economics of adaptive reuse are better. Making the numbers work starts with finding