Renovation, adaptive reuse stay strong, providing fertile ground for growth [2013 Giants 300 Report]

Increasingly, owners recognize that existing buildings represent a considerable resource in embodied energy, which can often be leveraged for lower front-end costs and a faster turnaround than new construction.
The Paramount Theatre of Cedar Rapids, Iowa, was heavily damaged by flooding in
The Paramount Theatre of Cedar Rapids, Iowa, was heavily damaged by flooding in 2008, with water inundating underground levels and rising nearly eight feet on the main floor. A team including KJWW Engineering Consultants and Ryan Companies revived the 1928 venue in 2012, incorporating modern amenities for performers and audiences. PHOTO: MAINSTREET STUDIO
July 19, 2013

Green-oriented reconstruction has generated major buzz in the past few years, even as the commercial building market has struggled. Reports like this year’s “Top 10 Megatrends” from sustainability guru Jerry Yudelson, PE, LEED Fellow, continue to emphasize the potential. Yudelson points out that LEED EB:O+M has been the fastest-growing LEED rating system for three years running, underscoring the current focus on existing buildings. (For more trends information, don’t miss Yudelson’s keynote at BUILDINGChicago.)

The green reconstruction principle transcends HVAC and plumbing upgrades, cladding and glazing improvements, and roof replacement. Increasingly, owners recognize that existing buildings represent a considerable resource in embodied energy, which can often be leveraged for lower front-end costs and a faster turnaround than new construction. The combination of speed, savings, and conservation is powerful in an era when budgets remain tight. Not every building is worth saving, but when the math makes sense, the results can be compelling.

For instance, the University of Cincinnati recently opted to renovate its Morgens Hall student residence tower for $25 million, saving an estimated $15 million compared with an equivalent new project. “We retained the shell, gained square footage in the dorms by enclosing balconies, and reused plant connections instead of having to extend utilities to a new building,” says Jeff Millard, Principal/COO of KLH Engineers. “It’s all about making dollars go farther on buildings and systems.”

Public clients are understandably trying to maximize scarce funds, especially for projects that lack a prestige factor that might attract donors. But private-sector owners and developers are also taking a closer look at existing buildings, with strategies ranging from targeted sustainability retrofits—often involving low-risk Energy Performance Contracts—to complete functional reinventions.

TOP RECONSTRUCTION ARCHITECTURE FIRMS

 
2012 Reconstruction Revenue ($)
1 Stantec $280,352,652
2 HOK $134,237,400
3 HDR Architecture $114,065,000
4 Cannon Design $87,000,000
5 Wight & Co. $78,367,600
6 HKS $72,000,000
7 HMC Architects $62,356,949
8 Astorino $55,944,000
9 Leo A Daly $55,674,775
10 Perkins+Will $54,045,000

TOP RECONSTRUCTION ENGINEERING FIRMS

 
2012 Reconstruction Revenue ($)
1 URS Corp. $292,591,405
2 STV $125,755,000
3 Wiss, Janney, Elstner Associates $72,500,000
4 Science Applications International Corp. $57,788,875
5 Middough $54,100,000
6 Dewberry $53,086,519
7 SSOE Group $52,518,417
8 Thornton Tomasetti $50,250,524
9 Syska Hennessy Group $49,258,501
10 AKF Group $45,000,000

TOP RECONSTRUCTION CONSTRUCTION FIRMS

 
2012 Reconstruction Revenue ($)
1 Structure Tone $2,001,631,400
2 DPR Construction $1,581,855,087
3 Gilbane $1,555,672,000
4 Turner Corporation, The $1,547,270,000
5 Whiting-Turner Contracting Co., The $1,103,049,380
6 PCL Construction Enterprises $796,283,833
7 HITT Contracting $789,024,806
8 Pepper Construction Group $753,093,000
9 Balfour Beatty $671,639,247
10 Barton Malow $597,731,773
 
 
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KJWW Engineering Consultants is working on adaptive reuse projects for clients in Chicago, turning former high-rise offices into hotels as a nimble response to local market trends. And FRCH Design Worldwide has seen a five-year increase in reuse, renovation, and “creative tenant deal-making” involving shopping malls, according to James L. Harkin, AIA, LEED AP, VP/Retail and Mixed-Use.

For one recent project at Polaris Fashion Place Mall in Columbus, Ohio, FRCH assisted with a renovation and tenant fit-out that required the Building Team to move a pair of 20-ton escalators a quarter of the length of the facility. The project took extensive logistical planning and some overnight labor, but it opened up attractive space for an H&M store and cost about 25% less than new escalators.

“In the heyday of mall development and deal-making, this level of complexity and concentrated focus on saving, reusing, and creative thinking would not have been considered,” says Harkin. “As margins, tenant requirements, and limited new mall product have evolved, we find ourselves part of a new reality.”

When historic properties or urban redevelopment are involved, many states and cities are providing important financial support for reconstruction. Emily Meyer, Associate Developer, Ryan Companies US, says, “Redevelopment of urban core areas and reuse of existing infrastructure provide benefits that are recognized and incentivized by local, state, and federal governments. Reusing existing structures, inherently green, also provides working and living space in higher density, walkable neighborhoods.”

Ryan recently renovated a Beaux Arts federal courthouse as a new City Hall for Cedar Rapids, Iowa, and is converting four stories of Davenport’s historic 12-story Wells Fargo bank tower into apartments. The project will provide needed market-rate housing in place of unneeded offices, while helping to preserve a city icon.

In Detroit, the century-old Whitney Building is the target of a just-announced $82 million reconstruction. Contractor Walbridge will transform the landmark—vacant since 2000—into a hotel and apartment property. The players include Starwood Hotels (which will locate its boutique Aloft brand in the Whitney), the Roxbury Group, and Trans Inns Management. Crucial to making the numbers work: an $8.5 million loan from the Michigan Community Revitalization Program, a $9.8 million state brownfield redevelopment tax credit, and $12.4 million in state historic tax credits.

State or municipal tax support is usually essential for making such large-scale renovations a reality. Government willingness to support the projects reflects growing recognition that reconstruction, not just new development, can produce an economic engine. Minnesota adopted a tax credit for historic rehabs in 2010; Iowa strengthened its program this year; and Wisconsin is also moving to increase its state credits.

The prospect is a bit less sunny on the federal side, however. Last summer, the Third Circuit Court of Appeals disallowed a third-party investment in the historic rehabilitation of a New Jersey convention center. Known as the Boardwalk Decision, the ruling overturned a lower court’s determination and cast a cloud over the interpretation of federal tax benefits for outside investors in historic property reconstruction, according to Ryan Companies’ Meyer (http://bit.ly/BoardwalkDecision). “Until the IRS issues further guidance, investors will remain skittish, keeping many projects from moving forward,” she says.

         
 

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