When you are out and about do you ever see an enchanting abandoned store you hope someone brings back to life again? Perhaps you have come across an abandoned historic building that could be transformed into a museum, trendy restaurant, or urban office space? National and state developers are always looking for opportunities to spur economic growth by identifying vacant commercial properties and revitalizing them. Although abandoned commercial spaces pose great challenges financially and structurally, they offer tremendous development and profit potential.
Commercial spaces can take many forms, ranging from hotels, restaurants, medical centers, retail stores, multifamily housing, garages, industrial warehouses, shopping centers, farmland, office buildings, stadiums, and more. Repurposing these spaces to meet current economic needs appropriately requires a lot of strategizing, fund allocation planning, and relevant legal authorization. Before committing to a commercial real estate redevelopment investment, consider the fundamentals below.
Types of Vacancy
Commercial vacancies do not necessarily mean the entire building is vacant, nor are all of the individual building unit vacancies long-term. Commercial buildings frequently experience short-term vacancies when office space or retail shops are in between tenants. When commercial space is vacant long-term, it usually results in inadequate cash flows, deteriorated building conditions, property liens, higher crime rates, and legal obstacles. Long-term commercial vacancies frequently deter investors from considering redevelopment because they are uncertain about the building’s condition and ongoing expenses.
Many times an individual, group, local authority or organization steps forward to take on the challenge. Revitalization efforts identify what could go wrong, evaluate several potential solutions, and determine the best method for resolution. Common development challenges include poor building conditions, weak market demand, unclear investment plans, unfavorable neighborhood market analysis, and limited access to funds.
Acquiring a Vacant Property
If a property owner has been identified, they may be willing to donate the property to a community-based organization or a state development project. Community developers can purchase liens on a particular abandoned property, foreclose it, and then acquire it for a project. Anyone interested in investing in a commercial development plan can search for properties through bankruptcy sales, auctions, sheriff’s sales, and short sales.
A successful commercial revitalization project completely depends on the thoughtfulness of its planning. An investor should find out the scope of the project, partner with development experts, and learn about the legal intricacies in the state where the property is established. Conduct a survey to define the goals of the redevelopment plan, determine the number of staff needed, comply with the vacant property registration ordinances, maintain project oversight, and pre-determine the required return on investment to make it worthwhile.
The primary steps involved in ensuring a victorious revitalization outcome are feasibility and acquisition. These steps require extensive research and planning in market demand, design scope, refurbishment opportunities, obtaining the appropriate approvals, project execution, marketing, renting, and ongoing operations and management. Revitalization opportunities give your creative mind the chance to run wild while supporting a market need. So what are you waiting for? Adaptive reuse is the need of the hour and the sky is your limit!