Office Repositionings Get The Attention. But Disinvested Areas Offer ‘Plethora Of Choices’ For Conversions
Repositioning assets is a costly challenge for commercial real estate players, but it can also serve as an agent for positive economic change in neighborhoods often overlooked by the development community.
At Bisnow’s Chicago Repositioning and Conversions Summit held at Bell Works Chicago, panelists lodged familiar complaints about the difficulties of converting office properties to residential assets, imploring the city to provide more support to make those conversions more financially feasible. But one participant said repurposing offers a unique upside that makes surmounting the financing hurdles worthwhile: the opportunity to revitalize disinvested neighborhoods full of unused assets.
Sana Syed, senior director of strategic initiatives at the Inner-City Muslim Action Network, has worked extensively on the Go Green on Racine project, an equitable neighborhood development initiative at the intersection connecting the Englewood and West Englewood areas.
The project is made up of three assets: a fresh market, a repurposed former school as a hub for supportive housing, re-entry services and green enterprise, and a mixed-use development with housing, a business incubator and a restaurant.
“Often in disinvested neighborhoods, there's a plethora of choices,” Syed said. “You have a lot of vacancies, a lot of shuttered businesses, schools abandoned, a lot of empty buildings.”
The repurposed portion of the project, the abandoned school, was pitched as a resource to support successful lives for the many people returning to the neighborhood post-incarceration, Syed said. Housing, healthcare and jobs are the three components that make re-entry successful, she said, so centering the reuse around those facets would meet a community need.
Like the majority of panelists, Syed said that city financing is a key component of the development process for similar reuse projects.
“The city needs to see itself as a partner and an ally because in many of these cases, these abandoned institutions are a result of public and private sector failure,” Syed said.
Developers in disinvested neighborhoods often have to fight even harder for resources to fund projects. As a result, Syed said she looks for projects that have the potential to make the greatest impact on the surrounding area.
When choosing the site for the Go Green on Racine project, Syed said she focused on the intersection of 63rd Street and Racine Avenue in the heart of Englewood, picking properties close to each other to generate momentum and reinvigorate the area.
“When you revitalize one intersection, you've created a ripple effect across the entire neighborhood,” Syed said. “There are considerations that have to do with social impact and what that means to a community to have an abandoned school sitting on a block for 10 years with no future vision.”
Some panelists urged caution with these developments because of the time it can take to secure financing for projects.
“I love the story in the buildings that you're selecting, but it could take you five or six years to assemble the financing necessary,” Celadon Partners’ principal and CEO Scott Henry said.
Syed confirmed financing the grocery store portion of the Go Green on Racine project did take five years. But it only took one year to get the Low-Income Housing Tax Credit for the repurposed school.
Adaptive reuse projects in disinvested neighborhoods come from a place of necessity, Syed said. Creating economic opportunities and removing blight from these neighborhoods are key factors in the project selection process.
Organization from within the community is important to create buy-in based on a shared vision and priorities, Syed said. Development can give the community a much-needed “win” and combat a rash of closures that have plagued disinvested neighborhoods for decades.
“A big part of what we would see as a successful project is not just some entity just coming into the neighborhood and repurposing something with no relationship to what's happening on the ground, but more that we organize ourselves as a community,” Syed said.
Community buy-in is vital when creating repurposed developments and ensuring they are sustainable, Commission on Chicago Landmarks Chair Ernie Wong said. Historic buildings give a sense of place to a community, and repurposing them can energize people who have lived in a neighborhood for a long time.
“If you are living in that community and you've grown up in that particular building, it gives you a memory and something that you can always look forward to when there's new life that you breathe into that building,” Wong said. “It gives a lot of people a lot of hope.”