I found this article relevant to some of the discussions in other threads. Hopefully this is kot behind a paywall for you guys.
Choosing between historic renovation and new construction
"As demand for urban living space rises, developers across the Midwest are wrestling with the decision of whether to construct brand-new buildings or renovate old ones.
A large number of Midwestern cities are growing at a rapid rate, with more than 75 percent of Midwestern population in major cities, according to the most recent U.S. Census.
The American dream of home ownership has run its course to some degree, and people are now very comfortable renting in cities instead of owning a home. This has caused rapid growth of urban residences, as 10 of the 11 Midwest markets saw population growth from 2005 to 2015, according to CBRE.
“There are different tastes among these city-bound folks. Some want new, contemporary construction, others prefer older, loft-style conversions," said Paul Giacoletto, project executive at PARIC Corporation, a construction company headquartered in St. Louis. "While the latter has dominated the residential construction industry in the Midwest over the last 10 to 15 years, the availability of historic renovation-type buildings is drying up."
"The opportunities for potential renovation projects in the region has begun to dwindle —they’re not gone, but the buildings with easy renovation potential are no longer available, moving the market towards new construction,” he said.
A shift in historic renovation
One main challenge when considering renovating a building is the stock of buildings in a specific city.
“What we’re seeing in our region is the growth of the boutique hotel market, which takes potential renovation candidates away from multi-family spaces,” Giacoletto said.
What’s left for developers to buy in cities like St. Louis, Kansas City and Cincinnati are exceptionally large buildings, which can present major rental challenges to owners — it’s easier to find tenants for 200 units than it is to fill three or four hundred.
With the dwindling inventory, it has become even more important for developers to thoroughly evaluate the condition of a building and fully calculate the economics involved in a renovation.
“If the cost to renovate goes up due to the size or condition of the building, then the economics start to become an issue, even though you’re getting state and federal historic tax credits. That’s what is driving the market more towards new construction," Giacoletto said. “It’s an inevitable future here in St. Louis, because there is no longer a large stock of historic buildings waiting to be renovated. There are still opportunities out there, but not the volume we had in the previous two decades.”
For developers who want the look and feel of an historic building, there is still reason to shop around. But if your search comes up empty or renovation is cost prohibitive, it’s probably time to consider new construction, as it may actually save you money.
"In an ideal situation, historic renovation is going to be more affordable, but there are fewer ideal situations now. That's because many of the buildings that are left, are left for a reason," Giacoletto said.
"While those reasons may not be obvious, partnering with somebody who can help you evaluate the building and understand those reasons can minimize your risk with this type of investment,” he said. “We take the pre-construction process to a new level by using laser scanning and x-raying equipment to better understand the conditions and challenges a renovation presents. A perfect example of this is the Arcade Building.”
The Arcade Building was originally constructed as two separate buildings — the Wright Building in 1906 and the Arcade Building in 1919. Upon its completion, it was the tallest concrete structure in the world. The 500,000-square-foot complex takes up half a city block in downtown St. Louis and features 282 total units, a street-level art gallery, three floors of underground parking, and three floors occupied by Webster University.
The building sat vacant for more than 18 years for various reasons, one of which was the size and the overall condition of the building. After performing a three-dimensional scan of the building, PARIC worked closely with the architect to reconfigure some of the units, because the structure of the building changed as it went up.
The three-dimensional scan made a huge impact in eliminating the number of requests for information (RFIs) during construction and the ease of construction in the field, allowing the use of pre-fabricated components throughout the renovation process. The extensive evaluation was a key factor in delivering the project in just 11 months.
“The fewer the number of RFIs, the better for everyone concerned, because it makes construction go faster and easier,” added Giacoletto. “And working together, efficiency, is a key to success for the architect, the contractor, and ultimately, the owner.”
Moving toward new construction
When the ideal situation for renovation is not found, it’s time to consider building something new. New construction presents its own challenges, especially if you're trying to build something comparable in size and structure to some of the existing buildings in urban areas.
Developing a plan that uses available materials and allows you to build a taller structure without exceeding your price point can be difficult. The cost of steel and concrete can be prohibitive to a developer’s ability to maximize the opportunity they might be considering for their urban development.
It takes a lot of planning, engineering and evaluation to develop the kind of plan that can produce a viable multi-family high-rise in the St. Louis region. One example is 212 South Meramec in Clayton, Missouri.
"We got involved early on with the ownership group and the architect. By working together as partners in the process, we arrived at an architectural solution that solved everyone’s concerns and problems regarding cost, the size of the unit, the net-to-gross footage — all of the components that make it economically viable,” Giacoletto said.
Construction on the $54.5 million project at 212 South Meramec started in November 2015 and is slated for completion this summer. What makes it significant to the region is that it is the first high-rise apartment building to go up in Clayton in more than 30 years.
With 250 luxury residential units on 20 floors covering 222,588 square feet, 212 South Meramec will be the largest multi-family and mixed-used building in Clayton. More than 12,000 sq. ft. of retail space will occupy the first floor, and there will be a pool deck, lounge, recreation room and fitness center on the roof floor, and the walkout deck will feature views of downtown Clayton and Shaw Park.
“We worked as a team to develop some unique solutions that made the building affordable, and now we are building a significant structure that might not have happened without that innovative thinking and teamwork,” Giacoletto said.
As the market continues to change, it becomes even more important to partner with a firm that understands the full scope of the market so you can look at all of your options and ultimately choose the most viable one. A firm with extensive knowledge in both markets will help guide you to your desired end result, turning your vision into a reality.
“It doesn’t have to be on the same site. It could be a developer looking to build something in the city, and he has two options — either vacant land for a new building or renovation — and the question becomes what’s going to net him the greatest return,” said Giacoletto.
For those deciding between new construction or renovation, it is important to partner with a firm that can evaluate both options. Having a company with a solid pre-construction database to understand the cost of both historic renovation and new construction, as well as the technology to evaluate an existing structure and understand the construction challenges, is vital to minimizing risk with such an investment.
At the same time, you want a firm that can implement innovative solutions for new construction that speed up the construction process while lowering the overall cost. Finding the mixture is not an easy task.
“It is hard for an owner to find a company that has the experience to provide a true comparison between the two,” said Giacoletto. “Our clients know that we have the cost database, the technology and the expertise to give them a fair analysis financially in order to determine what is the best route to go.”
For more information about PARIC visit www.paric.com.
http://www.bizjournals.com/bizjournals/ ... ign=buffer
Choosing between historic renovation and new construction
"As demand for urban living space rises, developers across the Midwest are wrestling with the decision of whether to construct brand-new buildings or renovate old ones.
A large number of Midwestern cities are growing at a rapid rate, with more than 75 percent of Midwestern population in major cities, according to the most recent U.S. Census.
The American dream of home ownership has run its course to some degree, and people are now very comfortable renting in cities instead of owning a home. This has caused rapid growth of urban residences, as 10 of the 11 Midwest markets saw population growth from 2005 to 2015, according to CBRE.
“There are different tastes among these city-bound folks. Some want new, contemporary construction, others prefer older, loft-style conversions," said Paul Giacoletto, project executive at PARIC Corporation, a construction company headquartered in St. Louis. "While the latter has dominated the residential construction industry in the Midwest over the last 10 to 15 years, the availability of historic renovation-type buildings is drying up."
"The opportunities for potential renovation projects in the region has begun to dwindle —they’re not gone, but the buildings with easy renovation potential are no longer available, moving the market towards new construction,” he said.
A shift in historic renovation
One main challenge when considering renovating a building is the stock of buildings in a specific city.
“What we’re seeing in our region is the growth of the boutique hotel market, which takes potential renovation candidates away from multi-family spaces,” Giacoletto said.
What’s left for developers to buy in cities like St. Louis, Kansas City and Cincinnati are exceptionally large buildings, which can present major rental challenges to owners — it’s easier to find tenants for 200 units than it is to fill three or four hundred.
With the dwindling inventory, it has become even more important for developers to thoroughly evaluate the condition of a building and fully calculate the economics involved in a renovation.
“If the cost to renovate goes up due to the size or condition of the building, then the economics start to become an issue, even though you’re getting state and federal historic tax credits. That’s what is driving the market more towards new construction," Giacoletto said. “It’s an inevitable future here in St. Louis, because there is no longer a large stock of historic buildings waiting to be renovated. There are still opportunities out there, but not the volume we had in the previous two decades.”
For developers who want the look and feel of an historic building, there is still reason to shop around. But if your search comes up empty or renovation is cost prohibitive, it’s probably time to consider new construction, as it may actually save you money.
"In an ideal situation, historic renovation is going to be more affordable, but there are fewer ideal situations now. That's because many of the buildings that are left, are left for a reason," Giacoletto said.
"While those reasons may not be obvious, partnering with somebody who can help you evaluate the building and understand those reasons can minimize your risk with this type of investment,” he said. “We take the pre-construction process to a new level by using laser scanning and x-raying equipment to better understand the conditions and challenges a renovation presents. A perfect example of this is the Arcade Building.”
The Arcade Building was originally constructed as two separate buildings — the Wright Building in 1906 and the Arcade Building in 1919. Upon its completion, it was the tallest concrete structure in the world. The 500,000-square-foot complex takes up half a city block in downtown St. Louis and features 282 total units, a street-level art gallery, three floors of underground parking, and three floors occupied by Webster University.
The building sat vacant for more than 18 years for various reasons, one of which was the size and the overall condition of the building. After performing a three-dimensional scan of the building, PARIC worked closely with the architect to reconfigure some of the units, because the structure of the building changed as it went up.
The three-dimensional scan made a huge impact in eliminating the number of requests for information (RFIs) during construction and the ease of construction in the field, allowing the use of pre-fabricated components throughout the renovation process. The extensive evaluation was a key factor in delivering the project in just 11 months.
“The fewer the number of RFIs, the better for everyone concerned, because it makes construction go faster and easier,” added Giacoletto. “And working together, efficiency, is a key to success for the architect, the contractor, and ultimately, the owner.”
Moving toward new construction
When the ideal situation for renovation is not found, it’s time to consider building something new. New construction presents its own challenges, especially if you're trying to build something comparable in size and structure to some of the existing buildings in urban areas.
Developing a plan that uses available materials and allows you to build a taller structure without exceeding your price point can be difficult. The cost of steel and concrete can be prohibitive to a developer’s ability to maximize the opportunity they might be considering for their urban development.
It takes a lot of planning, engineering and evaluation to develop the kind of plan that can produce a viable multi-family high-rise in the St. Louis region. One example is 212 South Meramec in Clayton, Missouri.
"We got involved early on with the ownership group and the architect. By working together as partners in the process, we arrived at an architectural solution that solved everyone’s concerns and problems regarding cost, the size of the unit, the net-to-gross footage — all of the components that make it economically viable,” Giacoletto said.
Construction on the $54.5 million project at 212 South Meramec started in November 2015 and is slated for completion this summer. What makes it significant to the region is that it is the first high-rise apartment building to go up in Clayton in more than 30 years.
With 250 luxury residential units on 20 floors covering 222,588 square feet, 212 South Meramec will be the largest multi-family and mixed-used building in Clayton. More than 12,000 sq. ft. of retail space will occupy the first floor, and there will be a pool deck, lounge, recreation room and fitness center on the roof floor, and the walkout deck will feature views of downtown Clayton and Shaw Park.
“We worked as a team to develop some unique solutions that made the building affordable, and now we are building a significant structure that might not have happened without that innovative thinking and teamwork,” Giacoletto said.
As the market continues to change, it becomes even more important to partner with a firm that understands the full scope of the market so you can look at all of your options and ultimately choose the most viable one. A firm with extensive knowledge in both markets will help guide you to your desired end result, turning your vision into a reality.
“It doesn’t have to be on the same site. It could be a developer looking to build something in the city, and he has two options — either vacant land for a new building or renovation — and the question becomes what’s going to net him the greatest return,” said Giacoletto.
For those deciding between new construction or renovation, it is important to partner with a firm that can evaluate both options. Having a company with a solid pre-construction database to understand the cost of both historic renovation and new construction, as well as the technology to evaluate an existing structure and understand the construction challenges, is vital to minimizing risk with such an investment.
At the same time, you want a firm that can implement innovative solutions for new construction that speed up the construction process while lowering the overall cost. Finding the mixture is not an easy task.
“It is hard for an owner to find a company that has the experience to provide a true comparison between the two,” said Giacoletto. “Our clients know that we have the cost database, the technology and the expertise to give them a fair analysis financially in order to determine what is the best route to go.”
For more information about PARIC visit www.paric.com.
http://www.bizjournals.com/bizjournals/ ... ign=buffer
