M id A tlantic Real Estate Journal — Owners, Developers & Managers — November 2023 — 7C
www.marej.com
O wners , D evelopers & M anagers AXIS emerges as regional leader in adaptive reuse office to residential conversions Diverting office space crisis into a cost effective solution to relentless residential demand P HILADELPHIA, PA — In the shadow of construction cranes on
adaptive reuse portfolio, the company consistently beats the market with first costs as low as 30-40% less than inexperienced competitors. Builders constructing mul - tifamily residential structures out of the ground for the last 20 years have certainly altered the landscape and introduced a new aesthetic. However, AXIS has developed a sophisticated sense and deep appreciation for; the inherent value of repur- posed properties and through the years that has helped preserve the city’s historically rich skyline.
"At AXIS, we meticulously restore, convert, and breathe new life into amazing old build- ings," said Bostic. "A complex renovation project worth tens of millions is vastly different than a brand new building out of the ground. The two assignments could not be any different, and your project is not where you want an inexpe- rienced GC to get an education in adaptive reuse!" Factoring in the many vari - ables of the region’s expensive first cost to build, logistics, ap - provals, a shortage of qualified GCs and subs for these specific
the surge in suburban office developments over the last 30 years, is also feeling the pres- sure of higher vacancy rates and underutilization. This also raises the question whether future office conver - sions will all go all residential? And if not, what are the other potential uses for office com - plexes from Charter Schools to University Extension cam - puses to high-end retailers including collectible watches, jewelry and expensive home furnishings opting for non- storefront retail locations for security reasons. MAREJ
types of assignments, the hid- den challenges will quickly over- whelm an inexperienced team. Mistakes often start during the pre-construction stage, by inexperienced construction managers who simply don’t know how to properly sequence next steps or deploy strategies to avoid expensive pitfalls. Simply put, if a GC doesn’t have a robust and successful track record doing these types of conversions, the developer is in for a bumpy ride. And while the developing office space crisis is impacting primarily major urban centers,
the skyline – normally the sign of a robust de- velopment market -- a crisis is brew- ing across the nation in the commercial real estate
William Bostic
sector as office space vacancy has soared from 13% to 23% – 27% in many cities, with office utilization at 50% or less. Though initially a direct re- sult of pandemic remote work adjustments, with advancing technology and evolving gen- erational labor patterns, it is clear the remote work trend will continue. And while a trillion dollars of GDP in the commercial office space sector is at risk, it also presents a ready solution for the current unrelenting housing demand. "We are witnessing a para- digm shift in the marketplace," said William Bostic , president of AXIS , a 25-year-old King of Prussia-based construction management firm with over 15 years of background in adaptive reuse. "The only way to win when the fundamentals of the market are literally shifting un- derneath your feet... is to build the right team and move fast." While conversions from office space to residential are clearly the answer to avert massive losses of real estate equity in the coming years, it is expen- sive and challenging due to variables in the way commer- cial buildings are configured, with large open floor plates, and complicated, centralized mechanical infrastructure. Addressing issues like natu- ral light sources, utility access and residential design de- mands, requires a reimagining of the facility and sacrificing expensive features and equip- ment that no longer fit the new application. Whether it's removing a relatively new and expensive commercial HVAC system, or carving out the building core to create light wells, or otherwise substan- tially altering a building’s footprint, there is no substitute for experience. The knowledge base that al- lows AXIS to master adaptive reuse projects translates to a cost-effective, speed to market approach. Across an impressive
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