MAY 2024

12A — May 2024 — Owners, Developers & Managers — M id A tlantic Real Estate Journal

O wners , D evelopers & M anagers

Turning commercial space crisis into solution to relentless residential demand AXIS announces Historic 1890 Pierce College, Center City Philadelphia conversion project

HILADELPHIA, PA — The national crisis in the commercial real estate sector in the wake of the pandemic has seen persis- tent and sustained office space vacancy rates across America. Though initially a direct re- sult of Covid-19 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 P

the market are literally shift- ing underneath your feet … is to build the right team and move fast.” Though newer office build - ings are taking the brunt of the office vacancy crisis ... the latest estimates are that the older 30% of commercial build- ings across the country are pretty much obsolete and need to be torn down or converted. The implications of this be- yond the sheer financial losses by building owners and banks, gets to the heart of what the urban centers of this country are going to look like in the future. From the standpoint of the AXIS Construction Man- agement LLC adaptive reuse conversions are not always the answer but with a starting point of budgetary rigor, they can make economic sense in most cases. While conversions from of- fice space to residential are clearly the answer to avert massive losses of real estate equity in the coming years, it is expensive and chal- lenging due to variables in the way commercial build- ings are configured, with large open floor plates, and complicated, centralized mechanical infrastructure. Addressing issues like natural light sources, util- ity access and residential design demands, requires a reimagining of the facil- ity and sacrificing expensive features and equipment that no longer fit the new applica - tion. Whether it’s removing a relatively new and expensive commercial HVAC system, or carving out the building core to create light wells, or other- wise substantially altering a building’s footprint, there is no substitute for experience. Even with the substantial initial investment, the eco- nomics of office to residential conversions are extremely positive long term. Beyond recouping conversion costs, a successful AXIS conversion balances out equity values moving from more expensive commercial space with resi- dential at lower psf rates. And while the developing office space crisis is impact - ing primarily major urban centers, the surge in suburban office developments over the last 30 years, is also feeling the pressure of higher vacancy rates and underutilization. MAREJ

as the construction partner with MM Partners in their prominent portfolio commer- cial/industrial to residential conversion projects. The 1420 Pine property offers numerous challenges including a series of renova- tions and combining spaces with adjoining buildings since 1890. Bill Bostic CEO at AXIS has some interesting perspectives on turning this into contemporary residences. “We are witnessing a para- digm shift in the marketplace,” said Bostic. “The only way to win when the fundamentals of

Pierce College

unrelenting housing demand. AXIS Construction Man- agement LLC is preparing

to transform Pierce College at 1420 Pine St. in Center City Philadelphia conversion,


Creating flexible spaces that inspire people as they live, learn, work, heal, and explore


Mid-Atlantic Region Baltimore, MD Hamilton, NJ Philadelphia, PA Richmond, VA Washington, D.C.

Made with FlippingBook - Share PDF online