Shifting Opportunities
While the bulk of office space in the U.S. needs to consider its competitive positioning, not all is lost for those facing headwinds. Owners and investors focused on proactively addressing such challenges will be able to recover value and generate returns. By exploring opportunities to reposition or repurpose, no shortage of opportunity exists with the right partners for strategy, funding and execution. Through case studies and deep dives into the sectors such as life sciences, healthcare and multifamily, Obsolescence Equals Opportunity explores alternatives for repositioning and repurposing.
Repositioning
Repositioning strategies are among the least costly and most efficient strategies for bringing an obsolete office property up the value and relevance curve. However, it does require experience and insight to ensure any investments are the right size and in the right areas to meet tenant demand in the local market.
Repurposing
Depending on the market, submarket or property, an asset may not be a strong candidate for repositioning strategies, either due to the competitive landscape or due to the building’s physical characteristics. Owners of assets that are candidates for repurposing should thoroughly estimate project costs, demand-side potential and exit value assumptions in the next part of the evaluation phase.
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Total Budget $20 Million
- Transformed quality of space and amenities to attract tenants
- Commitment to quality and detail was key throughout execution
- Common area amenities and alternative work areas were appealing to tenants
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1984-vintage office asset purchased for $16 million ($55/sf) later sold for $128 million ($441/sf)
- Extensive renovation transformed the property from an office for Bank of America to a distribution warehouse
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1980s, 3-building Full-Repositioning Play
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Total Budget $10 million, Chicago’s iconic Hancock Tower
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