Converting Commercial Buildings Into Residential
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Many landlords and property investors are transforming tired commercial buildings into prime urban real estate. So how can you take advantage of this trend?
In the words of one of the world’s most successful commercial real estate developers, Donald Trump; “If you’re thinking already, you might as well think big.”
After a commercial real estate property has been acquired, the goal should be to attempt to boost its value as well as maximise the revenue it delivers as an investment.
One way to achieve this goal is to develop the commercial premises into a residential property and either sell or lease the converted accommodation.
Not everyone can expect to succeed in commercial and residential property to the same extent as Donald Trump, but closer to home in Australia, there are many excellent examples of ‘commercial turned residential’ developments.
Perhaps one of the most accessible examples of commercial premises that have been converted successfully to residential living spaces has been played out on our television screens.
Channel Nine’s The Block has run with this concept on more than one occasion, producing excellent financial results for both the network and the contestants. In 2014, Dux House in the Melbourne suburb of Albert Park – whose previous incarnations had been as a cinema, a church and office space – was transformed into four glamorous residential apartments through innovative renovations. This ‘commercial to residential’ renovation formula was also applied to an office block in inner-eastern Prahran in the next series.
Finding the right property
Converting commercial buildings into residential developments can be an attractive prospect, but there are a few things to consider before launching into your own project. Firstly, find the right commercial property. As an investor, look for the usual attributes – a great location, access to all the desirable amenities including public transport, cafes, schools and arterial roads. A trusted commercial real estate agent will be able to supplement your own research with advice and provide property options that meet your brief.
For any commercial premises you have earmarked, the next step is to find out if there are planning or zoning constraints, which will affect whether a building can be re-used, demolished or redeveloped. Contacting the local council will help you understand what is and isn’t permitted regarding change of use.
The fun part
Commercial properties, including offices, shops and warehouses, all have the potential to be transformed into contemporary living spaces. They may offer character and features that newer buildings can’t, making them attractive commercial investments. The cost of converting and renovating can vary hugely, so it pays to do the research and try to source information from comparable conversions.
Finding, converting and making money from a ‘commercial to residential’ project is not only possible, it’s exciting. It can bring out the character of a building and create something extraordinary. But as with all investments, nothing replaces research and experienced, trusted advice.