Aging office buildings constructed more than 20 or 25 years ago face stiff competition from newer models that feature more amenities, smart technology, modern designs and energy efficiency. These days, in order to remain competitive, older buildings need much more than a facelift or a lighting retrofit.
Owners of older properties oftentimes need to rethink their relevance and find ways to reposition in a new environment. “Awakening” these aging assets was one of the topics discussed at the CoreNet Global North American Summit last week in Washington, D.C. The aging inventory of office buildings in Central Business Districts (CBDs) across the country puts the issue front and center for property owners.
In primary markets, the vast majority of office buildings were built prior to 1990—before the Internet, smartphones, green building practices and “smart” building automation.
“Those technological changes have really redefined the way that [companies] engage with these assets,” says John Clegg, a principal at Page, anand engineering firm based in Washington, D.C.
Many older office buildings have difficulty competing with new class-A properties and tend to slide into the class-B or even class-C territory. That decline translates into lower rents, and in some cases, lower occupancies. The big question is how to best revitalize those properties to maximize their value potential.
“What we’re really talking about is how to get smarter about an asset. How do you find value that you might not know is there?” notes Jamie Flatt, an associate principal at Page.
Making the necessary improvements could translate into hundreds of millions of additional dollars in rental revenue per year, notes Flatt. “So, there is huge potential if owners are willing to rethink what these assets are and shift their prospective goal market,” she says.
ERA Lambros Real Estate
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