What requirements does an owner have for a building? Anyone building a new building usually knows this. Against this backdrop, it’s essential to design buildings to be as flexible as possible to allow for the greatest possible versatility. This applies equally to offices, residential buildings, shopping centers, schools, and logistics buildings. The requirements for buildings today are changing due to demographic change, digitalization, Work 4.0, and commercial and logistics real estate due to Industry 4.0. These industrial properties are often designed to suit a company’s specific operational processes. If such a building stands empty today because it has outgrown the needs of its users, it cannot be sustainable in that sense. Otherwise, it would be used. In the worst case, it will be demolished despite its technical functionality, and the building materials disposed of. But what if demolition isn’t an option and the buildings have already existed for 10, 20, or 30 years? Is there a chance for them too?
Real estate as a business instrument
Tenants come and go, new businesses move in, and spaces are restructured. Buildings, in particular, are constantly undergoing renovation and repair work. Once planned as a commercial or even industrial facility, the building now serves one or more other uses. The latter is becoming increasingly common. Multifunctional uses, which should and ultimately must adapt to a constantly and rapidly changing society, present new challenges for owners.
With the transformation of the economy and working practices, the real estate industry is also undergoing a transformation driven by society’s changing demands and expectations. Owners must consider strategically how to convert vacant commercial space into flexible use concepts. When developing new concepts, it is essential to design spaces that allow for a variety of uses. Real estate costs are a significant cost item whose importance as a business management tool is growing. Well-thought-out, future-proof use concepts that address sustainability and climate compatibility will also have a positive impact on the future sales proceeds and valuation.
The Corona crisis and what next?
The COVID-19 crisis had a wide range of impacts on the real estate market, varying by region, market segment, and timeframe. In many regions, particularly in suburban and rural areas, real estate prices rose. This was partly due to increased demand for larger living spaces and home office-friendly apartments. Demand for office space declined sharply due to increased home office use. Many companies reduced their office space or adjusted their leases.
New construction projects whose cost estimates had been calculated one or two years in advance could hardly be completed within the estimated budget. During the pandemic, many production facilities around the world were temporarily closed or their production capacity significantly reduced. This led to a shortage of available raw materials and disruptions to supply chains, including in the construction industry. Prices for essential building materials such as cement, steel, and wood rose significantly. Many construction projects had to adjust their budgets or were temporarily halted.
Uncertainty about the future development of commodity prices and the reluctance of banks and financial institutions to grant loans for construction projects ultimately led some investors to withdraw and adjust their investment strategies. This, in turn, impacted the availability and cost of real estate.
Opportunities for existing areas
Increased home office work has led to significantly less office space being used. The shift in shopping behavior to online shopping has led to a decline in retail and commercial space. The largest sales losses were recorded in central locations, except on main shopping streets such as Bahnhofstrasse in Zurich or Rue du Rhône in Geneva. Various brands have invested heavily and are attracting attention with new visual identity and sales concepts.
Local businesses in residential areas outside of urban centers have experienced a boom, with co-living and working in the same location. New approaches and solutions have emerged, including new concepts such as co-working spaces and serviced apartments, micro-living in urban areas, self-storage, and mini-storage facilities.
Digital accessibility and customer-focused concepts for individual storage needs are another way to bring new uses to existing space. Due to the increased popularity of online shopping, logistics companies have been experiencing an increase in space requirements for several years. Since the coronavirus pandemic, the global trend of companies seeking to be less dependent on changing supply chains and having as many important components stored nearby as possible is noticeable. This is also evident in Switzerland.
Conclusion
The economic success of a property is directly linked to its flexibility. If a building adapts to the needs of its users, it will be accepted and used by them over the long term. Furthermore, life cycle costs are reduced because expensive retrofitting can largely be avoided. Landlords of multi-tenant properties particularly benefit from this. After all, they have to adapt to diverse tenants and frequent tenant changes.
Buildings are easier to convert if walls can be added or removed at a later date. This can be achieved if certain considerations are taken into account during planning. For example, if load-bearing interior walls are largely avoided. Or if the design allows partition walls to be added at any facade axis of the basic grid without interfering with the floor or ceiling. It is also important to consider a reserve load for conversions in the structural calculations.
If you’d like to learn more, please contact us. We’ll be happy to help you initiate a plan for sustainable use and show you the optimal long-term solution for your property.
