Bass, Berry & Sims attorneys Cheyne Harris and Marisa Rouse authored an article for BUILDINGS detailing the top three considerations for real estate developers and investors pursuing adaptive reuse projects for industrial properties.
The pool of vacant industrial buildings has increased significantly over the last few years as businesses have tended to move operations to new locations rather than renovating their current facilities. Constructions costs have skyrocketed, and these vacant industrial places offer an opportunity for companies to develop the sites into something completely new, which inflicts lower costs and minimizes the carbon footprint imparted by the company. This “adaptive reuse” process also allows developers to take advantage of numerous federal and state tax incentives.
However, adaptive reuse projects also come with their own challenges from zoning issues, environmental concerns, and building regulations and requirements, the authors note.
Zoning is particularly challenging as zoning ordinances limit the permitted uses of a property and should be researched prior to the onset of a project. Some projects require developers to obtain zoning variances, which can become time consuming and costly, so it is important to know what exactly the company is getting itself into.
As for environmental concerns, the previous use of the property can present challenges such as the removal of hazardous substances or even full remediation. Developers should consider hiring an environmental consultant to assess the property to avoid taking on unexpected environmental liability.
When it comes to building regulations and requirements, the developer should be realistic about how feasible it is to comply with building codes, meet accessibility and safety standards and meet energy efficiency standards.
“An essential key to redeveloping an industrial property for adaptive reuse is performing the necessary diligence at the outset of the project, the scope of which will vary based on the unique characteristics of the property,” Cheyne and Marisa emphasized.
The full article, “3 Top Considerations for Adaptive Reuse Projects for Industrial Properties,” was published by BUILDINGS on July 17 and is available online.