M id A tlantic Real Estate Journal — Financial Digest — 1031 Exchange — April 2024 — 11A
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By Jared Donnamiller, PE, AKF Group Conversions and Affordable Housing: A Blueprint for the Future
T he evident need for more affordable housing and the increase in com-
local lawmakers to change the incentives for developers. This ultimately creates more afford- able housing units for the fami- lies that need them and takes the glut of underutilized office space out of the market. Collab- orative solutions between the different cities, states, develop- ers, and design teams can leave a lasting impact that becomes a blueprint for the future. Jared Donnamiller, PE is a partner at AKF, an MEP/ FP Engineering & Inte- grated Services firm with offices throughout North America. MAREJ
with new technology. All these options are being reviewed with a focus on viability, cost,
lawmakers are putting finan - cial incentives in place to make the conversions viable and
lobby upgrades, amenities, decarbonization upgrades, and MEP system upgrades. Top tier developers and land- lords are entering the market with properties that are in desirable locations and contain upwards of one million square feet. This has the potential to offer great mixed-use and dedi- cated residential properties in central urban locations at rates that account for most family income ranges. The large-scale success of these conversions through 2024 and into 2025 may be a catalyst for more state and
mercial office building va- cancy rates in many ma- jor US cities has created a confluence of storms with a potential resolution to benefit fami - lies in need of
The support of lawmakers at all levels and the creative approach from design and construction teams may provide a solution that offers owners and developers an alternative to defaulting on existing loans while creating affordable housing options to benefit city residents.
energy usage, and phasing, among other factors. We have seen a significant uptick in activity in this mar- ket in 2024 as more building owners are challenged with increased vacancy rates and
provide affordable housing. While class A+ office properties are still seeing strong interest, the less desirable are getting less traction. The less desirable properties are also in more need of attention in terms of
Jared Donnamiller
housing and owners of mostly vacant office buildings. The support of lawmakers at all lev- els and the creative approach from design and construction teams may provide a solution that offers owners and develop- ers an alternative to defaulting on existing loans while creating affordable housing options to benefit city residents. Converting commercial of- fice spaces to residential has been limited to date. Current financial hardships and zoning requirements associated with the conversions has limited the viability of this approach to many owners. Law makers at the state and local levels are working on solutions to make these options pencil as well as updating zoning require- ments to make more large floorplate office buildings work for residential occupancy. Washington, DC is specifically offering a Housing in Down- town (HID) Program that will offer 20-year tax abatements to developers and owners who convert their office buildings to residential and include a minimum of 10% of the units for affordable housing. The challenge with the adaptive reuse approach is not limited to cost of construction but extends to design chal- lenges for architects and en- gineers tasked with turning a dated commercial office build - ing into a desirable place for families to call home. AKF’s involvement is specifically focused on mechanical, elec- trical, and plumbing (MEP) upgrades to the systems and decarbonization of the exist- ing buildings. The original construction date and existing MEP systems in place differ across the viable properties which require a custom design approach. There is a fine bal - ance between reusing and re- purposing existing MEP infra- structure vs. integrating new technology or fully replacing
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