Adaptive Reuse of Commercial Buildings

Neighborhoods with a variety of buildings of different ages, and especially those with historic buildings, can offer a built environment that’s well-suited to independent businesses. A study from the National Trust for Historic Preservation found, for example, that neighborhoods with a diverse mix of building ages have more startups and a higher share of small businesses, compared to those with newer and more uniform buildings.

The challenge is that, in many cases, historic commercial buildings have become vacant and fallen into disrepair.  Many communities have old warehouses and industrial facilities that are sitting empty, as well as downtown buildings that may have once formed a busy shopping district but are now underutilized, empty, or even blighted. While these buildings have a lot of potential to seed a crop of new businesses, for a startup or an independent entrepreneur, they can require too much time, work, and capital to retrofit, bring up to code, and re-occupy. Investing in such renovations can be a difficult feat for local entrepreneurs or even commercial property owners to take on alone. And the chances of success are not great for a lone business that restores a building without similar rehabilitation efforts happening in nearby structures.

By establishing Adaptive Reuse programs and providing modest incentivizes that reduce barriers to retrofitting historic buildings, cities can spur the recovery of entire neighborhoods and facilitate the growth of local businesses. Added benefits include maintaining a diverse commercial building stock and reducing development pressure in undeveloped areas. Adaptive reuse of existing, historic commercial buildings can also help cities create a distinct identity and character, which in turn can both strengthen a sense of community and attract new investment.

Citywide Adaptive Reuse Program: Phoenix, Ariz.

One example of such a policy in practice is in Phoenix, where a citywide Adaptive Reuse Program is designed to encourage local entrepreneurs to start businesses in older spaces, specifically those that are vacant, fall within certain square-footage tiers (including properties under 5,000 square feet, a size tier that is particularly suitable for small, local businesses), and were built prior to 2000.

Administered jointly by the city’s Planning and Development Department, Office of Customer Advocacy, and Community and Economic Development Department, this program supports local property owners, developers, and small businesses, through mechanisms that include guidance and regulatory relief, such as permit-fee waiver incentives and faster permitting timelines, for eligible projects.

Since the program’s initial pilot over a decade ago, more than 90 new businesses have launched in previously vacant and now renovated spaces, and the program has offered these businesses significant savings—by one report, the first 12 businesses to use the program each saved an average of four-and-a-half months of work time and $16,000 in fees.

“The adaptive reuse of existing buildings preserves our history, contributes to economic vitality, promotes building effort, and creates more vibrant neighborhoods.” — City of Phoenix Adaptive Reuse Program

Learn More About Adaptive Reuse in Phoenix:

Community Land Trust Adaptive Reuse: Public-Private Partnership in Anchorage, Alaska

Another unique example of adaptive reuse comes from Anchorage, Alaska, where the Anchorage Community Land Trust, a local organization that works as both “a land trust and as a community development organization,” leverages public and private resources to acquire and develop properties that are strategic to the community’s redevelopment efforts. Using a unique commercial community land trust model that focuses on real estate for new commercial tenants, the organization works with entrepreneurs, independent businesses, and the city to repurpose and make use of derelict properties. Since its founding in 2003, the land trust’s programs have renovated 10 properties, placing more than 24 commercial tenants in these spaces, and have improved more than 10 facades of eligible commercial buildings in the community.

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Marie Donahue

Marie Donahue was a Research Associate with the Institute for Local Self-Reliance’s Energy Democracy and Independent Business Initiatives in 2018-2019. She analyzed and wrote about the implications of corporate concentration and monopoly in these sectors.