Adaptive reuse has become one of the most important conversations in commercial real estate today. Long Island has a large inventory of aging retail, office and industrial buildings, and adaptive reuse is transforming these obsolete buildings into viable assets and reshaping Long Island’s CRE landscape.
Why is adaptive reuse a viable alternative? First, Long Island is largely built out; there are very few undeveloped parcels left, especially in desirable locations. This forces developers and municipalities to think of creative ways to repurpose underperforming buildings. For municipalities, rezoning properties is the first step towards revitalization.
Second, the rise of e-commerce has fundamentally changed how consumers shop on Long Island. Many large retailers have gone out of business and malls have lost their anchor tenants. This shift has led to many adaptive reuse opportunities, including reinventing Long Island malls. Current retail trends are shifting toward open-air shopping centers that incorporate experiential, recreational, and dining options, transforming malls into destinations, not just places to shop for clothing. Malls are also being repurposed to medical offices, which in turn increases foot traffic for retailers at these locations.
Third, the office market is evolving post-COVID. With work from home and flexible work environments, the demand for traditional office space has declined. This change has led to a surge of office-to-medical conversions. This is a hot trend primarily because existing layouts in these buildings are readily adapted to medical uses, they are near residential neighborhoods, there is ample parking and there is a pressing demand from healthcare providers.
Other adaptive reuse trends include industrial to recreational- and office-to-multifamily conversions. Although office-to-multifamily conversions have not gained significant traction on Long Island primarily due to zoning constraints, growing pressure for housing may eventually push this trend to the mainstream.
Andrea Tsoukalas Curto is a partner and co-chairs the firm’s renewable energy practice group and is a member of the land use and zoning practice group at Forchelli Deegan Terrana LLP, Uniondale, N.Y.