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Commercial real estate conversions have become quite trendy

On Behalf of | May 30, 2024 | Real Estate

Commercial real estate can be a smart investment. Some companies acquire portfolios of commercial real estate to rent it out to others and make money off of the management services provided. Some investors buy property and make improvements to resell the property later.

Other organizations may currently own facilities that they previously used or rented out to tenants. These companies may want to sell their property to startups and investment groups. Those contemplating a commercial real estate transaction as a buyer or a seller need to be aware of the trends that affect the market.

Currently, there are quite a few commercial property owners and prospective investors looking to capitalize on the decrease in office space demands by converting commercial property into residential units. What do those considering acquiring or selling real estate need to know about commercial conversions?

Converting an office building can be a challenge

As organizations that turned old industrial spaces into residential loss learned in decades past, turning existing buildings into residential units can be a protracted and expensive process. First, the owner or buyer seeking to convert the facility must first secure either new zoning or a zoning variance.

Then, it becomes necessary to invest heavily in changes to the infrastructure within the building. Requirements for wiring and plumbing, as well as temperature control, are vastly different in residential properties than in commercial spaces. There can be a lot of expense involved in the setup or planning stages and significant expense generated by the actual physical conversion process.

That being said, awareness of this trend can be beneficial for current property owners and aspiring developers alike. Those hoping to convert a building can look into the likely costs and timeline for a project at a particular space before making an offer on the property. Those attempting to sell commercial property could potentially leverage the location and size of the space, rather than its current use, to seek a higher sale price.

Converting vacant office buildings and other commercial facilities into residential properties can be a worthwhile real estate endeavor. It’s simply important to keep in mind that those preparing for large commercial real estate transactions or projects may need assistance handling all of the details involved in that process.