Designing Flexibility Into the Industrial Workplace, by IAMC/SIOR
A survey of corporate users of industrial facilities reveals opportunities and challenges in repurposing surplus industrial buildings. A joint project of the Industrial Asset Management Council (IAMC) and the Society of Industrial and Office Realtors (SIOR), the survey and white paper, “Designing Flexibility Into the Industrial Workplace,” offer valuable lessons learned about adaptive reuse and ways to build for future flexibility.
The research project set out to accomplish four goals:
- Understand the current state of industrial facilities portfolios and how they are being positioned toward a future that may well include a change of uses.
- Benchmark the performance of our own portfolios against other companies.
- Learn more about industry best practices in the areas of flexibility and adaptive re-use.
- Offer guidance on ways to build in more flexibility and overcome obstacles to re-use.
Among its primary findings:
- Corporate real estate professionals are concerned about these issues: “A significant 84 percent of respondents indicate that flexibility and re-use potential are issues for them.”
- “Industrial asset portfolios are aging: Nearly 80 percent of respondents said that their facilities — including warehouses, research sites, labs, and manufacturing plants — were on average at least 11 years old.”
- “Even factoring in cost to decommission sites from earlier uses, there are cost savings in repurposing facilities compared to building out an empty shell.” More than 70 percent of respondents reported that the cost of stripping a building of unneeded, older equipment and infrastructure ranged between $4 and $25 per square foot, on average. The top three properties for adaptability and reuse are warehouse/distribution centers, light manufacturing plants and research facilities.
- “Time to return on conversion investment is a critical consideration for corporate real estate portfolio managers.” When asked about ROI required to move ahead with a conversion project, more than 45 percent of respondents selected the one- to three-year time frame; 29 percent said they would consider a three- to five-year time frame.
- “Work process, technology infrastructure, facility layout and geography are the main challenges to flexibility.”
- “There are ways to dramatically increase building flexibility.”
The report also offers real world examples of repurposed facilities and conversion costs.
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