Redeveloping the right commercial property may offer abundant benefits and have the power to revitalize a community’s economy in more ways than you may imagine while drawing up the plans.
When done properly, commercial real estate redevelopment allows economically obsolete properties to be reimagined. There’s a realistic chance your redevelopment project will not only have added value but also enhance the local community.
Here are just some ways it can lead to improvement.
Naturally, redeveloping a property will raise the likelihood of increased value in the asset. And, the subject property isn’t the only one to benefit from an increase in value and demand. It’s not uncommon for surrounding properties' prices to benefit from an increase in one being revitalized to use as a sales comparable.
Redevelopment projects breathe new life into old, dilapidated buildings and increase property values. Where the value especially comes into play is utilizing existing, vacant structures because it helps to keep vacancy rates low, despite a number of retailers closing up shop.
What stands today as a unique restaurant concept experience, Century Grand, was once a Gino’s East and even a neighborhood dive bar back in its day. What made it an especially attractive redevelopment opportunity for SimonCRE was its rare acre lot, ceiling height, and overall building structure.
Because some of the original walls were able to be retained, the ±4,431-square-foot project skipped the lengthy entitlement process to bring it back up to code and time was spent on the actual revitalization instead. SimonCRE added even more value by partnering with Verizon Wireless to install a cell tower behind the building to fix a gap in service, and in turn, earn an additional income stream.
As mentioned, increased value may lead to an increase in business demand in that area or a higher customer-trafficked location. A common instance of this is when a neighborhood center gets a face-lift, restaurant operators, and even hotel and multifamily developers take notice when the center inevitably becomes more bustling. Moreover, this can often create an opportunity for adding character or historic significance that drums up a buzz about the area.
Famous as one of the “Grand” old buildings along Historic Grand Avenue in downtown Phoenix today, the redevelopment of the Tuft & Needle headquarters disrupted more than just the mattress industry. The ±36,000-square-foot adaptive reuse project was a diamond in the rough, bringing more life into the Historic District.
Notably, SimonCRE kept its promise to the Grand Avenue Members Association (GAMA) and community to redevelop with an emphasis on historic preservation and maintain that feel of supporting local business.
Piggy-backing on the theme of community benefits, redevelopment also contributes in a larger sense to protecting the environment by reducing previous blight as the site has previously been developed. Specific points include reducing new land disturbance and tree clearing; minimizing the amount of new resources required to manufacture piping, pavements, and building materials; decreasing crime (if it was previously vacant or run-down); and removing of asbestos or lead-based paint.
As you see more and more interest in sustainable development/reusing existing facilities and cities are welcoming adaptive reuse and redevelopment efforts, be sure to understand these important items before beginning the process.
An example of a property redevelopment that helped to decrease the amount of crime in the area was an old blighted building at 19th Avenue and Buckeye Road in Phoenix. The former grocer building had been vacant and stripped of all its copper.
SimonCRE worked through all the challenges to bring a beneficial new user, O’Reilly Auto Parts alongside the existing Rent-a-Center. The renovations, including adding a new facade and storefront, fulfilled the complete transformation the property desperately needed.
The positive impact of job creation the project will have is two-fold: 1) professionals hired for the redevelopment, including: painters, plumbers, litigation, lenders, roofers, electricians, architects, structural engineers, landscape designers, and inspectors; and 2) likely more employees at both the redeveloped property and nearby buildings, such as an increase in staff if tenant expands its space.
In another case study, a former record store and bike shop located in the heart of the Arizona State University trade area was about to close its doors because the owner was retiring. SimonCRE acquired the two-tenant retail property and came in with a new vibrant restaurant use for both new First Watch and Blaze Pizza locations.
This project has created more jobs, brought business back into that corner again, and added more dining options for over 71,000 nearby ASU students.
Aside from the personal benefits you’ll likely enjoy from taking the redevelopment route rather than starting from the ground up – such as cost and time savings and reduced permitting requirements – your project can inadvertently provide value outside of its property lines as well.