The current inventory of existing, vacant commercial real estate presents an opportunity for many investors. Due to the lack of market demand in recent years, many investors are diversifying their portfolios and selling properties at very attractive values. The attractive pricing and recent, subtle uptick in demand for commercial office space and light manufacturing has led buyers to be cautiously optimistic about investing in older buildings. Many savvy investors are able to acquire properties at price points that allow for dramatic façade and infrastructure improvements—while still preserving attractive lease rates.
Many commercial property owners are choosing renovations over new construction for a myriad of reasons: Faster time to market means that returns are realized sooner, often in as little as six months versus sometimes years for a new facility; the cost of building materials makes renovating a more cost-effective alternative to ground-up construction; and working with an existing structure also avoids many zoning and permitting issues often plagued by new construction.
The rapid increase in the cost of leasing space in Boston and Cambridge has spurred the migration of many biotech, pharmaceutical and technology companies to the surrounding suburbs. One area that is becoming a hotbed of renovation activity is the Lincoln Labs-Hanscom Field-Hartwell Avenue area. Maugel is currently working with Griffith Properties, Boston Properties and The Nordblom Company on ten such renovation projects in the area. All renovations will receive refreshes of lobbies, common areas, landscaping and signage. One five building portfolio will feature iconic architectural elements to clearly delineate their identities as part of a newly repositioned product.
For large space requirements, older industrial facilities are becoming an attractive option. The ease of the retrofits and the high-bay structures of industrial buildings allow for more dramatic and varied interior design options. FIBA Technologies of Millbury, Mass., recently purchased a vacant concrete pre-cast facility, constructed in the late 1960s or early ‘70s, located at 53 Ayer Road in Littleton. Maugel Architects designed a new facade and a glass atrium entry facade that transforms the building and creates a signature style.
As the market continues to strengthen, we expect to see the renovation of vacant commercial properties continue. The shortened time to market and superior cost benefits make commercial renovations an attractive path to occupancy.