The unpredictable swings within the real estate market means great things for those interested in buying commercial buildings. Investors are always on the lookout for businesses that are thriving and have potential to withstand the economic recession. But, the economy has not been kind to businesses. Many have had to layoff workers, downsize their retail spaces or abandon their locations, leaving “white elephant” empty buildings in cities across America. But, empty and abandoned commercial properties are not all bad. Commercial buildings can create unexpected benefits to the area when they are re-purposed into something unexpected. And, this trend to re-purpose existing commercial buildings is becoming a cost-effective alternative for commercial investors who are shying away from the expenses of from-the-ground-up building projects. Quite frankly, it is changing the look of our city landscapes.
As many mom-and-pop and chain restaurants have lost business during the recession, many have tightened their financial belts and closed locations in order to save costs. But, this has left unsightly empty buildings everywhere. Now savvy investors in commercial real estate see this time as opportune. Instead of building new commercial spaces, they can repurpose an existing space, forgo the necessity of building permits and create new profit generating businesses. Case in point being reported in 2011 Orlando Business Journal whereby a 6,000-square-foot foreclosed Sonny’s Real Pit Bar-B-Q restaurant was refitted to become a Funeraria San Juan funeral home. In fact, investors in central Florida have been taking distressed or obsolete sites that were zoned for retail, restaurant and automobile dealerships and redeveloped them into industry businesses that have established increased demand during the recession. For a previously closed Saturn dealership in south Florida, an investor saw vision to repurpose that space for education. As the economy has declined, there has been an increased demand for higher education skills and he saw opportunity to create an auto mechanic college. Other abandoned dealerships have been repurposed for aviation maintenance institutes and future land expansion for neighboring malls.
As real estate brokers and investment partners become more creative with finding new uses for abandoned properties, one of the most important aspects in the decision-making process is the upfront due diligence. Before any proposal can be established, the land has to go through investigations that will ultimately satisfy lender requirements. Many times, lenders require a commercial inspection to complete a Phase I Environmental Assessment to identify the previous usage of a property. A Phase I Environmental Assessment involves an inspection of the entire property, not necessarily just the building. It generally will include aerial photos, a walk around the property, a determination of property’s original history or usage, review of the EDR (Environmental Data Resources) database for buried tanks in the area and a review of the internal documents for hazardous waste disposal. A building inspector with certification in environmental auditing and building codes is the best candidate for detailed research and analysis reporting.