As a commercial property owner, the decision to renovate or rebuild will face you at some point in your ownership. As the property ages, problems and issues develop with building infrastructure and the building itself. Aesthetic preferences change and tenants want updated looks. As experienced contractors, we get this question a lot from our clients: renovate or build new? Here are a few financial and logistical considerations before you make a decision.
Some business have unique needs when it comes to their office layout. For instance, medical and dental practices require special design features and amenities. Renovation is typically less expensive than a complete rebuild, yet depending on the facilities required by occupants, a rebuild of a commercial office building may better suit the needs of the community it serves.
What can help considerably in this process is ensuring your renovation partners (contractor, architect, etc) have extensive experience with your specific industry. They are more likely to have the expertise you need and know how to find efficiencies during your project.
The costs of a rebuild are initially higher than for a renovation, however, if the property has declined in value against competitive properties or if you are considering a large addition or build out, rebuilding is probably the better option.
Consider renovation if you are only looking to make cosmetic changes to update the building and if the existing structure is sound. Remember, that even in a renovation surprises may arise when you uncover hidden or unexpected costs.
If the property is badly damaged with structural or foundation issues, wiring issues, termites or leaky, aging plumbing, then rebuild is the best option. Even if the building is an older building with low ceilings or an awkward floor plan, the rebuild decision can provide a higher ROI.
Rare issues such as historical preservation registration, may impact the extent of permitted demolition. If the building is historic or has features that stand out, it may be still returning competitive market rates for leasing and attract positive client attention. In such cases, consider renovation.
If location is a factor, rebuilding may exponentially increase property value if the building is near a luxury market community. Permit fees and property taxes on such a property may be higher than estimated, if the rebuild boosts property value beyond its current price. Find out municipal fees and taxation associated with a high value property.
Existing utility is the reason for retention of an original structure. A commercial property outfitted security systems, and the proper storage and equipment to serve medical practice occupants, has valuable features that can be retained with a renovation.
Space limitations or municipal restrictions prohibiting building footprint expansion, make building on or renovation more effective. If space to do the work is limited, requirements for equipment and workers is more extensive in a rebuild as large equipment and larger crews move in and out completing work. If you are expanding property or parking, then the rebuild offers more options.
If it is time for you to make this decision on renovation or rebuilding, consider calling Antham – we specialize in dental, medical and healthcare businesses and would love to assist you with your project. Contact us for more information.