Adaptive reuse in commercial real estate

By Brian Johnson
President 2021
Santa Barbara Real Estate Association

Adaptive reuse is not a new concept in commercial real estate. It is the practice of taking an existing building and reassigning it to a new use. It means renovating an existing building rather than tearing it down and building something new. In the past, we have seen isolated real estate assets in urban areas use this neighborhood renewal approach. There are rules that we have to follow to consider something as adaptive reuse.

The first is that you are reusing all or a substantial part of an existing structure. Tearing down a building and constructing a new one is not adaptive reuse. Second, the existing structure must have experienced some sort of functional or economic obsolescence. We see it with structures such as abandoned factories, factories, shopping malls, and other structures that have exceeded their usefulness. Finally, there must be a change in use. You can’t just put it alike in a renovated structure. We see examples of this with residential housing in old industrial lofts or commercial and experiential uses in old manufacturing areas.

Santa Barbara has experienced adaptive reuse over the years. The Funk Zone is probably the best example of adaptive reuse. An entire district was born out of old industrial properties. A range of properties and buildings have been repurposed for wineries, breweries, restaurants, artist enclaves, and consumer staples retailers. This kind of adaptive reuse is the future. This version 2.0 of adaptive reuse will seek to transform entire neighborhoods and not just isolated buildings or assets. It is a re-examination of our communities to reposition them for change. It is this kind of scenario that we could also see play out for an increase in the number of housing units in our downtown or our downtown areas.

For landowners and developers willing to take the risk and with the support of local governments who see the benefit of a changing landscape over the continuing decline of an area, there will be opportunities for new ideas and solutions. We are in the midst of a radical change in our conception of cities. With new technologies pushing driverless vehicles, the increased need for affordable housing in our urban areas, and the ever-developing changes in our lives following a pandemic, now is the time to explore the concepts of adaptive reuse in our communities.

Brian Johnson is a Licensed Real Estate Agent in California and the Managing Director of Radius Commercial Real Estate. Brian handles all types of commercial real estate transactions, but has a particular focus on multi-family investments. He can be reached at 805-879-9631 or [email protected]


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