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Adaptive Reuse Increases as Market Slows

Adaptive reuse strategies can keep CRE players competitive

After a high-performing first half of 2022, recent weeks have felt arduous and lethargic. Declining transaction volume coupled with yo-yoing rates have left the market unstable, and deals are suffering from the fallout. Gone are the days of rate-locking a deal on the same terms you entered with, and once the transactions that do make it to the closing table are finalized, it feels like the pickings (as far as assets go) are rather slim.

Enter adaptive reuse.

Adaptive reuse allows creative investors to pivot alongside the changing market. It’s becoming more prevalent as the inventory of choice properties and vacant sites dwindles. By targeting underperforming or misaligned assets in dense urban markets, savvy developers are not only making financially advantageous decisions; they’re often providing a much-needed product to the surrounding community (and cashing in on any tax incentives that may come with it). Adaptive reuse expands site selection and usually results in less competition for deals. It can also offer hearty proceeds at completion.

In this GlobeSt. article, Lauren Carnevale discusses some of the risks, rewards, and additional considerations for adaptive reuse CRE projects.