Opportunities and Challenges in Whole-Building Retrofits

Abstract

The premise of this project is that the most sustainable type of real estate development is the adaptive reuse of an existing building. Adaptive reuse of inner city buildings is an opportunity to return underutilized, close-in land for housing and other uses, to improve the environmental impact of buildings, and to provide robust rates of return which compensate developers for the higher risk inherent in this type of development. Buildings and the built environment have considerable deleterious effects on the natural environment, largely attributable to the energy consumed to operate them. The fossil fuels used to satisfy that energy demand contribute to global climate change, localized climate change, and damaging health effects. However, the built environment has considerable opportunities for positive contribution, and chief among them is the opportunity for re-use of existing buildings. It is imperative, for social, environmental, and economic reasons, that building re-use become more common practice. Part I of this paper explores the existing framework for adaptive building-reuse in the United States. The industry analysis includes the current state of land use impacts, building impacts, life-cycle analysis of buildings, brownfield redevelopment, and preservation. Then, existing writing about the topic is reviewed. Part II reviews the landscape as faced by a real estate developer, and highlights the opportunities and challenges. The development cycle is analyzed in each stage to understand the decision-making process, stakeholders, and benefits to an adaptive reuse project. Part III is a case study in the Cass Corridor neighborhood of Detroit, Michigan, an area ripe with existing building stock with incredible architectural character. A site overview is proceeded by a financial analysis of four development options for a typical apartment and retail building in the neighborhood: 1) Demolish and rebuild conventional; 2) Demolish and rebuild a LEED-NC 3.1 Gold building; 3) Renovate as a conventional building; and 4) Renovate as a LEED-NC 3.1 Gold building. Although several incentives are offered to developers to encourage adaptive reuse development, the most profitable option proves to be to demolish the existing building and build a conventional new building. Based on the analysis, recommendations for streamlining the adaptive reuse process include the creation of a national database of existing buildings, restructuring of existing incentives for better alignment with developer needs, and education about financial benefits of energy efficiency projects. In the case of Detroit, the city should focus on economic stimulation on top of the above recommendations, since the city already offers many incentives for redevelopment beyond what is offered by other municipalities. By first exploring the impact of the built environment on the natural environment, then by exploring the real estate development cycle with regards to adaptive reuse, and lastly by applying these lessons to a case in Detroit, this project aims to clarify the opportunities and constraints for adaptive reuse of existing buildings as a means for sustainable development