Converting Commercial Properties: Repurposing Vacant Real Estate to Create Value and Meet Market Demands

Description

Property owners have historically addressed struggling properties by either (1) finding a new tenant/buyer or (2) investing significant capital in upgrading the property. However, a third option, repurposing and/or redeveloping the property for a different use, is an increasingly viable alternative in keeping with recent market trends.

While the 2020 economic downturn accelerated the problem, large commercial spaces have been emptying at high rates due to major retail bankruptcies and office closures. As shopping malls, retail centers, and office complexes become vacant, property owners and communities must determine how to utilize this space.

Some jurisdictions have guiding policies for the conversion of retail or office space, and many localities now advise that zoning boards must "provide consistently applied administrative guidance on key areas of consideration when reviewing conversion proposals" and take into account the requested conversion's potential long term impact on neighborhoods. Other considerations are whether the requested repurposing is a product of "short-term market fluctuations" or resulting from a long term systemic shift in needs and feasibility.

Although repurposing may significantly increase a property's value, it often involves significant zoning approvals to complete. More municipalities are working with developers to reposition properties in order to reuse properties that would otherwise be vacant eyesores.

Additionally, counsel may have to deal with straggling tenants in near-empty properties and address the legal issues involved in maximizing the use of a struggling complex.

Listen as our expert panel of real estate attorneys advises on working with the stakeholders, local government, and communities themselves to turn empty properties into functioning opportunities for all. The panel will address zoning issues, compliance and conversion issues, and removal of holdover tenants as methods for effectuating this goal.