New York City has plenty of capital and clever people. What it lacks is open space for development. Those hoping to make their mark in the real estate world often need to employ creative approaches. They can’t simply acquire vacant lots and hold them for decades before selling them when urban infill reaches that location.
Properties generally command premium prices due to a finite amount of supply, which means that investors and real estate developers need to have a different approach in New York City than they would elsewhere. One of the common strategies used by those trying to break into real estate or plan their next big project is to redevelop an existing structure.
Examples of this project might involve converting office buildings into condominiums or turning an industrial space into a multi-unit apartment complex. Redeveloping existing properties can lead to a number of challenges. Real estate professionals often face the three issues below when trying to redevelop an existing structure for a new use.
Zoning challenges
Busy urban areas like New York City require strict zoning regulations to protect property values and communities. Those attempting to redevelop an existing property for a different use typically need to address the current zoning. They may have the option of seeking a zoning variance or asking to rezone the parcel. Both approaches can take a lot of time and investment to complete.
Local opposition
The idea of taking a building that barely sees any use and turning it into a thriving new space may at first seem like it should appeal to everyone who lives nearby. It might bolster their property values and bring new investment to the community. However, many people worry about gentrification pushing them out of their neighborhoods. Others want to preserve the charm of historic neighborhoods and buildings. Those seeking to redevelop existing facilities often face opposition from the people who stand to benefit the most from the project in the long run.
Massive infrastructure investments
Typically, converting an office building or industrial space to residential property means making significant changes to the interior infrastructure of the building. From HVAC ventilation to the number of power outlets in individual units, there are many details to address that can add up to be quite costly. Developers have to consider the practical implications of adjusting a space for a completely different use. They may have to redivide the interior spaces and add completely new building systems.
Preparing for the challenges ahead can take some of the risk out of real estate redevelopment projects. Those preparing to propose or invest in a project may need help evaluating the situation to identify risk factors and plan the best path forward, and that’s okay.