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The commercial construction industry in Arizona is projected to hit approximately $6 billion in 2023, according to IBISWorld research. It is no surprise to learn that the construction industry is booming throughout the state, and more specifically in Maricopa County; it is tough to drive anywhere in the state without seeing a construction project. Repurposing an existing space is not a new concept, but it is a growing one for multiple reasons.
LaunchPM recently completed a medical facility and clinic for Neighborhood Outreach Access to Health (NOAH) in South Scottsdale in a space that was previously home to a large car dealership, adapting and reusing the 30,000-square-foot building that sat empty for a few years. The space now houses a fully operating medical clinic that provides services and resources for medical, dental and psychiatric care to as many as 16,000 patients annually.
Benefits of Reuse
While Arizona still has available land for development, growth during the past 20 years leaves limited options in more populated urban areas. A lack of land availability in Greater Phoenix is a good reason to consider an existing space for adaptation and reuse. Building a business operation in an existing retail space gives the business immediate access to customers and employees nearby. One of the biggest advantages for repurposing an existing building is the speed to market and potential savings on construction costs. A ground-up build is almost always more expensive, and it takes anywhere from 18 months to multiple years to design, plan, secure approvals and complete construction. A redesign and construction can take as little as eight to 10 months.
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The savings of both time and money are significant, and when a business is able to get up and running faster, it also begins generating revenue sooner. The other advantage of reusing an existing site is that it will typically already have parking available, along with utilities and other usable infrastructure.
It is also valuable to note that repurposing an existing building reduces vandalism and helps eliminate issues with the homeless that are known to take shelter in unoccupied structures.
Adaptation Challenges
Transforming an empty big-box store, abandoned warehouse or office building comes with its own set of challenges. The space will need retrofitting to accommodate the functionality and operations of the new tenant. How much or little largely depends on the existing condition of the current building and what types of space the business operation requires.
Another factor that must be considered is if there’s a need for rezoning. For example, an industrial space that will be used as a medical facility could require rezoning. There is also an application cost for submitting a rezoning request, and it can take months to get through this process.
Opportunity Knocks
We are seeing brick-and-mortar stores closing across the Valley, along with entire shopping centers. Most recently, two national retailers, Bed Bath & Beyond and Buy Buy Baby, announced bankruptcy filings, which means a shutdown of stores is soon to follow. Sad news for these companies and their employees, but store closures also present an opportunity for businesses needing space in an established retail center. We are also seeing dilapidated buildings and open warehouse space in downtown areas being reimagined and transformed into vital entertainment venues. As spaces are repurposed, it brings new life to the commercial sector and residential interest is close behind.
Due Diligence
When considering repurposing a vacant building, conducting due diligence is critical. A thorough inspection of the space will uncover the status of the building’s electrical system and help determine if the existing wiring and panel is usable. It is also important to check the building’s foundational slab for any water or structural issues. With a clear understanding of any structural challenges, it is then possible to know the impact on the construction plan and costs.
Beth Scarano is the principal and CEO of Launch PM, specializing in commercial construction project management. The company’s portfolio of projects includes multiple healthcare clinics and medical offices, corporate offices, hospitality, education and municipal facilities.
Photo courtesy of Launch PM
