Office and commercial buildings from the 60s are the new cool

• About 70 percent of non-residential buildings in Germany are older than 40 years.
• The most frequent reasons for redevelopment instead of new build are co2 and cost savings.
• Location is often more important than the structure of a building or statistics

Munich, November 23, 2017. Department stores, office buildings, data centers: Around 70 percent of all existing non-residential buildings in Germany are older than 40 years - and many of them are no longer en vogue regarding their originally intended use. This is why owners of older real estate are increasingly confronted with the question of refurbishment, re-development or demolition and new construction, not only in Germany, but throughout Europe. The answer to this has become increasingly in recent years a decision for re-development often paired with a complete reuse. "Many buildings have an architectural, historical or urban significance. Last but not least, a stronger environmental awareness and economic reasons often play a major role in the decision against demolition and new construction," mentions Reiner Nowak, Managing Director of CSMM GmbH, as the main reasons for the rethink.

Consulting and architecture companies such as CSMM are increasingly being hired for projects in which the existing building fabric is to be preserved and made fit for new user requirements. "In addition to project development and classic tenant fit-out, re-development now accounts for over one third of our projects - and the number is increasing," says Reiner Nowak.
 
A large proportion of commercial real estate in Germany - especially from the post-war period until the 1990s - is today with regards to the real estate cycle in the so-called change or critical phase. They have peaked in terms of profitability, rents are falling and vacancy is spreading. In this phase, the real estate is usually no longer up to date in terms of energy and re-letting is hardly possible. Therefore, owners have to ask the question: demolish or re-develop?

Financial evaluation with regard to resource conservation, investment and return

Reiner Nowak: "Re-development makes sense in many cases. Not only does it cost less than new construction, it also consumes less energy. Most importantly, it creates flexible and future-proof space in existing structures for users and tenants to withstand the paradigm shift of digitization and globalization."

According to the re-development expert, redevelopment or complete conversion, as well as demolition and new construction, all involve dismantling costs. However, owners save the entire excavation and shell construction costs by preserving the building fabric. And according to CSMM, they make up a good 25 to 30 percent of the total construction costs. Depending on the project this could save several million euros.

Owners of older commercial properties can through re-development also significantly reduce their ecological footprint compared to new build. Anyone who retains existing structures saves on a major energy consumer by eliminating the use of steel or concrete and CO2-intensive cement extraction. "The construction industry directly or indirectly causes about a quarter of the carbon dioxide emissions of all industrial and combustion processes worldwide. The production of cement alone accounts for around five percent of global CO2 production, with the carbon dioxide released during the manufacturing process of building materials even accounting for 90 percent of the global carbon dioxide emissions of the construction industry."