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Monday
Feb272012

Unlocking Building Value Through Repositioning

From this...

...to this.

It’s still a very slow commercial office market on the West Coast of the United States, so when people see an office building project under construction, they start asking questions, placing calls: “what’s going on there?” “who’s doing that?” “In this economy?” Insightful property owners in this market look for and can find opportunities that unlock value now and will pay dividends as the economy recovers. Updating an aging or otherwise poor building asset in your portfolio when construction costs are at a low-point, is one of those opportunities.

That was the scene a few months ago as we wrapped up the transformation of a small office building for Continental Development Corporation. At the onset of the project they posed us with a challenge: Figure out a way to transform the middling building into a class-A office space within one calendar year. With a compelling and financially sound design concept, CB Richard Ellis would sign a lease to consolidate their area offices into a single South Bay headquarters occupying half the building. The one year design-to-move-in schedule was driven by CBRE’s existing lease expirations.

Our team jumped at the opportunity. However, the state of the building and the schedule both looked daunting, and we quickly learned that to deliver a great architectural solution, a nimble delivery approach was needed.

The key to a great transformative renovation is a concept design rooted in a thorough understanding of the bones of the old building. To figure out exactly how this building was built and then set parameters for what can and cannot be demolished, altered or replaced within a given budget and schedule, we needed an engineer and a builder. So we quickly hired a structural engineer and general contractor to help us make crucial initial decisions before we drew a single line.

From this collaboration, we were able to determine that a certain number of its exterior, tilt-up walls could be removed without costly reinforcements. Removal of these wall panels was key to creating class-A space. With small, dark window areas, the building was substantially lacking in daylight. Having the perimeter of the building opened up would allow daylight in and views out. We set out to design a high performance curtain wall that would replace about half the building’s existing skin. Coupled with new mechanical units, energy efficient lighting and low-water plumbing, we had a LEED-Silver certifiable design.

To establish the transformed building’s new identity, we designed a large shading screen wall and trellis that sits in-front of the curtain wall at the new two-story CBRE lobby. The screen cantilevers dramatically into the air and also provides solar shading for the lobby glass. The adjacent stone-clad tower envelops one of the old structural tilt-up walls we had to keep. We took great care to design everything so it could be fabricated from off-the shelf components because there was no time in the schedule for long-lead items. In the end, the new passenger elevator was the critical path schedule item, a seemingly simple catalog item, it took eight months of red tape to get operational.

The building now stands complete and almost fully leased out. Though just two stories in height, it has received considerable attention as it stands out amongst its middle-of-the-road neighbors on Rosecrans Avenue. It demonstrates that a well planned and executed repositioning strategy can help owners to increase tenancy, rents and lower operating costs even in today’s difficult market.

We are pleased with the results, and the project taught us that prior to starting work on commercial office project there are a few important considerations one must take into account:

  1. There are always existing or potential tenants who are downsizing or consolidating, looking for a better fit, not necessarily just cheaper rent. Case in point: Continental got a commitment from CBRE to sign a lease for nearly half the building. They were looking to consolidate multiple area offices into a single South Bay headquarters.
  2. Timing is crucial to success on a reposition project. Taking advantage of low construction market cost is just one element. In the case of Continental, a one year design-to-move-in schedule was set by CBRE’s existing lease expirations. A nimble delivery approach was key. The structural engineer’s early participation helped us develop a concept rooted in a thorough understanding of the bones of the old building.
  3. Get a general contractor involved early. A builder is also an essential partner in the early stages. On this project we used a shared BIM model that from the get-go accelerated collaboration with engineers and aided pre-construction estimating and scheduling with the builder.
  4. Aim for sustainability. Curb appeal is essential, but focusing on only how a building looks may be short sighted. The most dated building in your portfolio may also be one of the worst energy hogs. Regardless of how the lease is structured, this is the best time to reduce your project’s environmental footprint. More and more tenants are looking for green office space. In CBRE’s case, to achieve a LEED interior fit-out, the base building needed to be upgraded. We designed a high performance curtain wall that replaced about half the building’s existing skin. Coupled with new mechanical units, energy efficient lighting and low-water plumbing, we achieved a LEED-Silver certified design.
David Herjeczki is a design director in Gensler's Los Angeles office. A design leader with a deep commitment to innovation and a passion for ideas-driven design, Herjeczki combines rigorous design investigation and technical innovation to shape high-quality projects for both institutional and commercial clients. Contact him at david_herjeczki@gensler.com.

Reader Comments (1)

David,

Thanks for publishing this article, and it is interesting to read this right after hearing the presentation from San Diego on the repositioning of buildings for the Alexandria client. There are thousands of these tilt up structures in the Bay Area, and your outline of considerations are well worth noting as we push forward with working with investors and developers.

Doug
04.3.2012 | Unregistered Commenterdoug wittnebel

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