Empty Class B and C commercial buildings represent stranded assets that property owners can ill afford. One of two options seems inevitable in such cases. Either the building is repurposed or the building is demolished and replaced by a new structure more appealing to new tenants. Each solution requires the consideration of complex issues.
Converting a building can be very expensive. As a result, many property owners are hoping local governments will offer incentives.
In 2021, Calgary launched a Downtown Development Incentive Program (DDIP). The objective was to convert six million square feet of vacant office space by 2031, mostly to residential, and simultaneously increase the downtown population by 20 per cent. Grants of $75 per square foot of converted space were available to owners and developers as well as faster development approvals.
The allotted funding for the program was fully taken up. The program was revived in September 2024 under much the same terms, with a maximum of $15 million per project.
The federal government has jumped on board as well.
In November 2023, it announced six surplus federal properties would be developed into more than 2,800 new homes in Calgary and Edmonton, in St. John’s, N.L. and Ottawa.
However, as this column has previously outlined, conversions aren’t always practical or economical.
For example, buildings smaller than 25,000 square feet may lack the necessary economies of scale and therefore are less attractive prospects. Older or fixed floorplates, plumbing, window and ventilation layouts can make conversions pricey or complex.
Some guidance for owners is available through architecture and design firms like Gensler.
Nevertheless, repurposing or converting doesn’t always make sense versus demolition, despite the sustainability advantages. In premium urban locations, the owner might instead net a substantial leasing premium for a new, space-efficient building built for today’s needs.
If the removal of an older structure is decided, the issue switches to the most sensible process. This has introduced the term “building material circularity” being popularized in Europe. This means the consideration of a closed-loop, regenerative system rather than a linear one that destines massive amounts of waste to dump facilities.
Material circularity can be achieved by purposely reusing many of the components within the existing building such as the structural steel. An example can be found in the United Kingdom. Three quarters of a new eight-storey office building near London’s Piccadilly district will be built using reclaimed material that mostly comes from a nearby 40-year-old, 10-storey development. This includes Portland stone, granite, marble and timber handrails.
To make this concept work at scale, there is much discussion about “Material Passports” that serve as a detailed record of the construction materials used within a building. These passports provide essential information about the materials’ composition, potential for reuse and recycling.
As a result, developers can identify donor buildings in advance and design new projects specifically to suit, for example, the size of steel sections available from the donor building.
In the future, this could result in the selection of any components that can be easily separated and reused without damage, and planning for their effective recovery by designing connections and joints that facilitate easy dismantling. Support of the sustainable building agenda through building material circularity could also provide a useful marketing tool for project owners.
“Digital Product Passports” may become mandatory in Europe through future legislation. However, material passports are not widely used in Canadian construction. Although there is growing interest in the concept, it is still considered a developing practice with no regulations requiring their implementation in most construction projects.
This is a lost opportunity for Canada. It is estimated the country’s construction sector generates one-third of all total solid waste in this country. In its summary report titled Accelerating the Circular Built Environment Sector in Canada Workshop, Circular Economy Leadership Canada writes that applying these principles to Canada’s construction and real estate sector could generate multiple benefits.
John Bleasby is a freelance writer. Send comments and Climate and Construction column ideas to editor@dailycommercialnews.com.
Recent Comments