5 Keys to Making Adaptive Reuse a Success in Redevelopment

As work from home trends continue and the need for housing also grows, adaptive reuse is a tool of which developers and municipalities are taking full advantage.

Adaptive reuse is the process of taking a distressed or underutilized property and converting it to a use where demand is high. In New Jersey, this typically means converting office space to density housing, however, it is taking many other forms.

Many smaller malls across the state are readapting to “live at the mall” projects combining residential and retail uses. If adaptive reuse is an approach that might be right for your property, consider these five things:

1.  Do Your Research

It may seem obvious, but the most important place to start is figuring out whether your idea even makes sense. Is there a market for your proposal? Will you be able to obtain financing? Can the site support the project from an engineering and stormwater perspective? If the idea seems great but does not make financial sense, no matter what the feasibility of an approval it is not worth the time and effort.

2.  Communicate with the Municipality

The most successful planning or zoning board hearing, like a great opening night for a play, is not an accident, it is the product of extensive hard work and preparation. If your adaptive reuse project will need a use variance zoning board application with a host of ancillary variances, you are taking a dangerous roll of the dice.

Instead, after determining that your project works for you, the next step should be sitting down with the municipality. Most municipalities even have a formal application to request such a meeting. If they do not, picking up the phone to the municipal administrator or attorney can save you valuable time and money.

If the municipality is in favor of your proposal, there are many steps that can be taken including rezoning or redevelopment which can make your ultimate application an as-of-right project. This kind of preparation should make the final hearing the finale of your hard work and not a nailbiter.

3.  Explore PILOTs or Other Tax Incentives

If your idea is not penciling out with traditional tax assessments, explore the possibility that your municipality may offer PILOTs (Payment in Lieu of Taxes). These payments in their simplest form are typically equal to 10% of profits escalating to 12% over the course of 30 years.

However, there are other variations and less drastic tax abatements. It is important to note that PILOTs are only available on properties which are declared in need of redevelopment.

4.  Proactively Employ a Planner and Architect

Ideas are great but visuals and concrete information are better. Most municipalities are more receptive to ideas if they see some sort of visual and proposed standards for a project.

While the full cost of preparing construction ready plans is not advisable early on, employing a planner or architect to come up with a preliminary design and standards may help move the needle with a reluctant municipality.

5.  Keep Your Expectations in Check

Adaptive reuse is not a quick process, especially when a rezoning or redevelopment is needed. Managing your expectations and anticipating the time and expense before a shovel is in the ground is important. Even in the best of circumstances the time to complete this project will be measured in months and years not days and weeks.

However, if you follow the steps above and set your expectations accordingly the next great project may be yours.

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