REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Michael Mouron, founder of Capstone Real Estate, currently is seeking office tenants for the Streamline Moderne Greyhound Bus station in Birmingham, a vacant building historic for its 1961 stop by the Freedom Riders.

 The building is refurbished into a shell, awaiting a build-to-suit tenant.

“With adaptive reuse, I’ve found that most people can’t walk into an old building in need of repair and be able to envision what it can become. 

For that reason, I’ve always done the core and shell of historic building first — so people can at least see it restored,” he said.

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

“I have $25 million invested in the historic Federal Reserve. 

It appraised for $18 million. 

The difference between the $25 million and the reasonable $18 million appraisal was state and federal tax credits,” said Michael Mouron, founder of Capstone Real Estate. 

“The cost to restore the building would not manifest itself in rents that would justify the investment. 

So, tax credits rejuvenated a long-vacant building and created a restoration so appealing that it ran on the cover of a National Park Service report. 

The backup bid to my development proposal was a surface parking lot — the entire building would have been razed.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

“The key to effective historic renovation is state and federal historic tax credits. 

There’s a misconception that historic renovation should be cheaper than new construction,” Michael Mouron, founder of Capstone Real Estate, said. 

“People say ‘you have a building already, why would it be so expensive?’ 

Renovation certainly can be less expensive, but if you’re really trying to do first-class historic renovation using matching materials, such as granite beveled stone; drilling through a federal bank vault; preserving huge windows; putting in HVAC to heat and cool 20-foot-tall rooms, not 8-foot ones — it’s going to be expensive.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Birmingham’s Federal Reserve building had been vacant for 15 years before Michael Mouron, founder of Capstone Real Estate, acquired it. 

The building now is 100 percent occupied, including two levels of basement, the upper one containing a fitness center. 

The ground floor has a branch bank and restaurant. 

The second floor has an advertising/marketing firm, the third a real estate company and a law firm occupies the fourth and fifth floors.

The vacant Federal Reserve building in Birmingham, Ala., was restored into an office and retail complex.

SAVE THE DATE FOR MY MAY 3 BOOK SIGNING

PROUD TO BE A VISUAL ARTIST IN SAUDADES

I will be joining other artists for the book release of SAUDADES: Anthological Contemplations on Persons, Places, Identity, and Time

The event will take place 7:00 p.m. - 9:30 p.m. May 3 at the legendary Books and Books, 180 Aragon Avenue Coral Gables, Florida.

It will be a multimedia event featuring:

Poetry readings

Premiere of short film Saudade

Live performance by multi instrumentalist singer/ songwriter Bill Cruz who will perform the 2 song lyrics included in book

Gallery exhibit curated by Diego Quiros composed of works by the visual artists in the book

Saudades book signing by all artists.

Saudades is part of the Untranslatable Words Series by Amy Serrano.

https://www.facebook.com/SaudadesBook/ 

https://www.sirenfilms.us/films

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Michael Mouron, founder of Capstone Real Estate, has been a developer for four decades and roughly 20 percent of his projects have involved adaptive reuse of historic buildings.

“If a building is in a good location — and that doesn’t mean it has to be at the corner of Main and Main Streets — if it has some innate charm to it, it’s a great candidate for adaptive reuse,” he said.

“If it has high ceilings and some good onsite parking, it can work.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Michael Mouron, founder of Capstone Real Estate, has a long history of reviving classic and historical buildings in his Birmingham, Ala., base and beyond.

He even purchased the 1929 Art Deco downtown Akron, Ohio, building that was home to the Pulitzer-winning powerhouse Beacon Journal Newspaper. 

He tried to turn it into office space for a branch of FedEx then a new Akron City Police headquarters and is still searching for an adaptive reuse after those deals failed to come to fruition.

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Johnny Noon, NAR’s director of Engagement/Commercial, said NAR’s commercial committee is focused on encouraging local REALTOR® associations to work with local government to ensure that zoning allows adaptive reuse.

He said a lot of parking ordinances are prohibitive for older buildings, which were built before the automobile, so they don’t have a parking pedestal within or an attached parking deck.

“Our research teams are asking more about [adaptive reuse]. Our members are asking for classes on it,” he said. 

“When you think about it, mom and pop landlords provide a lot of affordable housing. 

At a time of a housing crisis, we need tax incentives and zoning that supports people who are doing adaptive reuse on a smaller scale.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Johnny Noon, NAR’s director of Engagement/Commercial, said adaptive reuse is a hot topic among members, as is the lobbying for more tax credits to support the challenges of such redevelopment.

“Conversion of an old office building into residential can be expensive. 

Residential has different infrastructure, such as plumbing, HVAC, and electrical systems,” he said. 

“But this can be a way of creating more housing. 

I’ve even seen old motor lodges converted for senior living.

There is demand for repurposing structures.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

“We gutted the Jeffrey HQ building and connected it to the R&D buildings with a bridge,” Dan Schmidt, principal at JDS Companies, said.

“The R&D building was interesting because it had a railroad track going through the center of it. 

We kept the old board room for the HQ building and its two working fireplaces. 

We kept the stained-glass windows and commissioned large murals on the sides of the buildings.”

Schmidt said there were challenges, including building an exterior elevator to serve industrial buildings that didn’t have residential elevators and necessary environmental remediation, among others. 

Today, there’s a healthy waiting list for the apartments. 

He noted that projects like his could benefit from historic tax credits and other programs. Only a small city-of-Columbus tax abatement was in place at the time he developed.

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

The Jeffrey Manufacturing Company office building was transformed into apartments in the Italian Village neighborhood of Columbus, Ohio.

The Jeffrey complex is in an urban neighborhood just north of Downtown Columbus and adjacent to the Short North Arts District. 

Dan Schmidt acquired the vacant headquarters and research and development buildings plus adjacent land where part of a factory had been demolished. 

He created more than 100 unique residences which replicate the distinctive look of the razed factory. 

The project won design awards.

KICKED OFF THE NEW YEAR TALKING UNIVERSAL DESIGN

ON THE PLANNING COMMISISON PODCAST 

We discussed planning a world of equality and excellence by creating a better built environment for people with disabilities.

Great to chat with planners Chris Danley and Don Kostelec.

The Episode Description:

Equal access to the places we seek to enjoy is often misunderstood.

For disability and accessibility expert, Steve Wright, it is his passion and lifelong profession.

Steve sat down with us to discuss the subject at length, clarify misconceptions, and really explore the ins and outs of what accessibility means.

As we continue to seek a world of equality and excellence, ADA laws and addressing our built environment for those experiencing a disability cannot be left behind.

Here’s the link to the podcast with video:

https://www.youtube.com/watch?v=Yv8zxPVc8Ks

 

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN 

Dan Schmidt, principal at JDS Companies in Columbus, Ohio, has been doing adaptive reuse for a quarter century. 

He appreciates the ability to give new life to an old building, but understands the financial challenges.

The Jeffrey Manufacturing Co. was founded in the 19th century and became one of the world’s first and largest makers of mining machinery. 

At one time, the firm employed about 5,000 people in Columbus. 

But by the later 20th century, the assets had been sold by the Jeffrey family and the buildings were ripe for redevelopment.

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

There are myriad benefits, such as energy and climate savings that come with recycling an old building rather than razing it and using all new materials for a fresh building.

Redeveloping within existing infrastructure saves money because none has to be spent on water, sewer, roads and other services because they are already there.

“These are risky projects. 

Some buildings don’t easily lend themselves to adaptive reuse.

That justifies the tax credits,” Evan Liddiard, CPA, director, Federal Taxation | Federal Policy and Industry Relations for NAR, said.

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

The coalition has asked the Revitalizing Downtowns Act’s sponsors to expand it to also cover malls, shopping centers, industrial properties, hotels and even schools and to extend the incentive to real estate investment trusts that invest in these kind of revitalization projects.

A letter of support for the new tax credits emphasizes that adaptive reuse can help address the severe housing shortage as well as post pandemic repositioning of real estate.

The letter emphasizes that adaptive reuse adds to the tax rolls that virtually all local governments rely on to fund municipal services.

“We are looking for bipartisan support,” Evan Liddiard, CPA, director, Federal Taxation | Federal Policy and Industry Relations for NAR, said.

“A successful conversion takes an unused building and makes it worthwhile. It boosts the supply of housing and especially affordable housing.

It’s a boon to the economy because of all the jobs created in redeveloping the buildings and the new capital infused in the neighborhoods.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Federal and state tax credits often are part of the financing stack that make adaptive reuse viable. 

But under current law, federal tax credits are limited to historic buildings and often require specialists in the system to consult on the deal, due to the labyrinth of rules.

“This Act would mainly help older class C and Class B office buildings. 

We are pushing for something broader that would incentivize the conversion of all kinds of commercial property and not just office buildings. 

We are working with a coalition of more than a dozen real estate interest groups to support this,” said Evan Liddiard, CPA, director, Federal Taxation | Federal Policy and Industry Relations for NAR.

He emphasized that the tax credits are justified by the public good that would be created by bolstering the commercial real estate sector, the construction of more residential units, and the resulting new jobs and boost to the economy that come from a successful conversion.

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN 

The Revitalizing Downtowns Act would provide a 20-percent tax credit for qualified property conversion expenditures. 

The credit is modeled on the historic rehabilitation tax credit and can be used for office buildings that are at least 25 years old at the time of the conversion.

Under the bill, a conversion to housing may qualify for the credit if the project provides at least 20 percent affordable housing dedicated to households whose income does not exceed 80 percent of the Area Median Income. 

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Because there are so many challenges that come with adaptive reuse, the NATIONAL ASSOCIATION OF REALTORS® (NAR), is working hard to encourage Congress to create tax incentives. 

Evan Liddiard, CPA, director, Federal Taxation | Federal Policy and Industry Relations for NAR, pointed to legislation introduced in both the U.S. House and the U.S. Senate that would provide a limited tax credit for adaptive reuse — The Revitalizing Downtowns Act.

TO FUND MY DISABILITY INCLUSION RESEARCH IN JAPAN

I HAVE GREATED A GO FUND ME ACCOUNT

I've spent more than three decades as an advocate for a better built environment for people with disabilities.

For several years, I have done more than $10,000 worth of pro bono work in the disability community.

I have an opportunity to join the family of the late Mark Bookman + Emmy-winning documentary maker Ron Small for a series of events previewing "Mark -- A Call to Action" in Tokyo.

The film portrays Mark's work as a global disability inclusion leader, based in Tokyo.

Bound for PBS, it also is a call to action for all architects, planners, engineers and more -- to create cities and places where all people with disabilities can access all housing, workplaces, schools, parks, arts, shopping, transit and more.

I am budgeting $4,000 for roundtrip airfare (economy, smallest seat), hotel (pod style, lowest cost), transportation (public transit where possible) and meals (low cost street food).

gofund.me/93c0532c

My amount of pro bono work means that for the first time in my life, I am seeking support to help cover the expense of my travel for research.

In addition to the premieres, I will be meeting with key leaders in the disability community in Japan.

Many feel Japan's commitment to Universal Design is creating inclusion for people with disabilities that rivals that opened by the landmark Americans with Disabilities Act.

My photography of innovative design and lifelong contacts made during my 10-day visit will inform dozens of articles and hundreds of social media posts.

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I have written stories about best urban design practices to accommodate wheelchair users.

I have worked as a town planner to create better sidewalks, parks, transit and housing for people with disabilities.

I created a groundbreaking course on Universal Design at the highly rated University of Miami School of Architecture.

I make dozens of social media posts each day of the year -- sharing ideas for inclusion and equity in civic spaces.

Your support will allow me to continue to be a leader in planning and design of communities that are accessible to all.

gofund.me/93c0532c

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

KC Conway’s Adaptive Reuse: Turning Blight into Bright report authored for CCIM, cites five things holding back adaptive reuse:

Five Barriers to Adaptive Reuse (AdRu)

1. An industry-recognized definition:

This would allow data on AdRu activity to be collected and segmented to facilitate the development of metrics, which in turn would help developers and capital sources in underwriting more investment.

2. Collection and reporting of key metrics:

Commercial real estate industry participants need to understand how AdRu activity impacts absorption and vacancy for uses it is displacing and transaction metrics, such as capitalization rates and internal rate of return.

3. Local approval, permitting, and zoning processes and ordinances:

This may be why developers and investors are not undertaking more AdRu projects. A developer can perform all the appropriate due diligence and engineer a compelling design, only to learn half-way into a project that an additional approval or zoning variance is required; such unforeseen events cause time delays and cost overruns that can disrupt construction schedules by months and increase project costs beyond the typical 10-percent budget contingencies.

4. An industry-recognized methodology for underwriting and valuation:

National banks are reluctant to take on large AdRu lending given the dependence on local-market knowledge and the absence of recognized market data for underwriting.

5. Acceptance by institutional capital and investors:

Life insurance companies and other institutional entities have mostly ignored AdRu because of their risk thresholds.

 

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN 

K.C. Conway, Real Estate Economist and Futurist and principal of Red Shoe Economics, who maintains a database of 40,000 adaptive reuse projects and speaks nationally on the subject.

He said game-changing adaptive reuse could be as simple as a city tearing down old, single-use parking decks and replacing them with slightly taller projects that have ground floor retail, a few levels of structured parking plus residential floors and a roof garden accessible to the public.

“What e-commerce did to retail, remote work is doing to office buildings. But there are challenges. 

Depending on the office building vintage, you can’t punch holes in the floor to put in more plumbing,” he said.

“Some are too big to create residences because interiors wouldn’t have natural light.

Some are located in areas not attractive to residential.”

REVITALIZING, REBUILDING & REPURPOSING

THE BENEFITS AND TECHNIQUES TO MAKE IT HAPPEN

Cities need to update antiquated zoning regulations.

For instance, Tucson, Ariz., revitalized its fading central corridors by creating adaptive-reuse-friendly zoning.

K.C. Conway, Real Estate Economist and Futurist and principal of Red Shoe Economics, said for decades, adaptive reuse meant turning an old, architecturally beautiful train station or skyscraper into mixed use or residential.

Or it meant trying to find a new use for a gigantic dead shopping mall. “Three thousand branch banks closed last year and 30,000 are for sale. 

We have to look at those and what is a growing need — health clinics, remote work centers, things like that,” he said. 

“These are great locations already zoned commercial.

Think small, think bite sized. 

You can revitalize without having to tackle a 30-story building or on the scale of an abandoned mall.”