Should I renovate or rebuild my commercial property?

President, ReDev Properties
  • Sep. 23, 2015

Richard CrenianWhen deciding between renovating and rebuilding a commercial property, there are a variety of things to consider, both financially and logistically. While there are some general guidelines you can follow, there are no hard-and-fast rules and each situation is unique.

That being said, the best way to decide how to move forward with your decision is to weigh the pros and cons based on a variety of factors. These factors range from cost and the condition of the property to your preferred timeline and lifestyle. Both options come with their own inherent challenges. But if you take your time and consider everything carefully, the advantages can far outweigh the drawbacks.

The following chart outlines the main things to consider when choosing between renovating and rebuilding a property. If you follow these guidelines, you’ll be well on your way to a commercial property with excellent value, whether it’s a retail strip mall or an apartment building.

 

Renovate If …

Rebuild If …

COST

You have enough wiggle room in your budget. Depending on the age of the building, certain elements may need to be upgraded. Additionally, hidden or unexpected costs can come along with renovations. That being said, if most of the work is cosmetic and you love the existing building, a renovation can be a great choice.

If you are looking to build a large addition onto the property. If you want to double the size of your existing structure, it’s probably more economical to knock it down and rebuild. Also, if the property is worth much less than the other properties or businesses in the neighbourhood, a full rebuild could be a worthy investment for the future.

CONDITION

The building in question has a strong foundation with few structural issues. Renovating is also a good option if the property has historic features that add to its selling power and should be preserved.

The property has issues such as termites, leaky plumbing, or bad electrical wiring that would cause problems during a renovation. Sometimes it’s less work to just start from scratch.

NEIGHBOURHOOD

The neighbourhood places certain restrictions on demolitions. Some areas have guidelines you need to follow depending on the building’s position relative to the street and a variety of other factors.

The property is located in a highly desirable neighbourhood where there is little risk of over-committing and you can be sure to see a high return if you choose to sell.

LIFESTYLE

The commercial property requires the flexibility of tenants staying on-site while the project is being completed. This also allows you to take on more construction as your budget permits and keep the costs of storage down.

You can manage the costs of alternative accommodation and storage. Rebuilding can be less disruptive because you do not have to deal with the day-to-day hassles of a renovation. It’s also a viable option for those who want to complete the project on a tighter schedule.

FLEXIBILITY

Your schedule and budget is more flexible. When renovating, costs as well as the timing of the project can fluctuate a lot. You need to be prepared for any unexpected curveballs.

You’re looking for a more predictable undertaking. When rebuilding, attaining a demo permit can be challenging, but once you have it, costs and timing are usually more manageable.

SPACE

The space on your property is limited and your only option is to build upwards. Sometimes a solid foundation is all you need.

You want to extend the building outwards and have sufficient room in the surrounding area. Rebuilding requires large equipment, which will take up more space on your property and perhaps even the street. Rebuilding is also a good choice if the existing building is lacking in parking and you need to create more room for it.

 

Before you make your decision it’s important to speak with a professional architect or contractor who can guide you in the right direction. Choosing between renovating and rebuilding takes time, but once you do your homework you’ll be one step closer to that perfect property.

Richard Crenian is the founder and President of ReDev Properties. Since its founding in 2001, Richard and ReDev Properties have grown the asset management company using a long-term approach to manage over 25 commercial properties, primarily located in Western Canada. To learn more about Richard please visit www.richardcrenian.ca.



Richard Crenian is the founder and President of ReDev Properties. Since its founding in 2001, Richard and ReDev Properties have grown the asset management company using a long-term approach to…

Read more

Richard Crenian is the founder and President of ReDev Properties. Since its founding in 2001, Richard and ReDev Properties have grown the asset management company using a long-term approach to…

Read more




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