Repositioning of Office Buildings – Strategic Measures and Advantages

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Repositioning of Office Buildings – Strategic

Measures and Advantages



www.expresstowers.in 2

Repositioning of Office Buildings – Strategic Measures and Advantages

The Crossroads Corporate Centre in New Jersey, U.S was built in the 1970s. By the beginning of the new millennium, t

building’s image and amenities were outdated and would not have appealed to contemporary occupants and visitors. It w

then sold to a property company that recognised the strategic location of the premises, the possibility of it becoming

multi-tenant building and the advantage of repositioning the Centre.

Six months of considerable renovation resulted in a complete makeover of the external facade, upgrade of HVAC system

and internal structural & facility improvements. The Crossroads Corporate Centre was now transformed into an upsca

office building offering world-class corporate facilities at half the expenditure of constructing a new office building.

25000 sq. ft of space on the premises were soon leased out to a prominent client.

he repositioning of any commercial building is a strategic step undertaken to add significant value to the propertyoriginal worth, while retaining original occupants and attracting potential tenants.

The philosophy of repositioning can be traced to the global concepts of urban renewal and redevelopment. In the

contemporary forms, these two concepts have been prevalent since the late 19 th century and rose to their peak

developed nations in the 1940’s. Cities such as New York, Chicago and Melbourne converted large areas of unde

developed or decaying neighbourhoods into commercial and residential spaces, but faced many obstacles and issues in th

process.

On the other hand, the redevelopment of a building is most commonly based on the principle of reformation and th

provision of economic impetus. The concept should not be confused with that of area-wide regeneration, which involvereconstruction on a massive scale and whose benefits are ambiguous and sometimes subject to controversy.

The process of repositioning a building is a carefully considered procedure and results in economic benefits and significa

value-addition to the structure. More importantly, a repositioned building is able to compete on an equal level with new

properties in the same usage category. A building’s repositioning strategy emphasises on certain core standards such as t

timing of the repositioning programme, the type of occupants the building aims to attract and the subsequent strateg

upgrade of aesthetics and amenities. Effective execution of the strategy will provide maximum long-term benefits to th

parties who hold a stake in the property.

T



Repositioning of Office BuildingRepositioning of Office Buildings – Strategic Measures and Advantages


Timing the Repositioning

Industry experts have theorised that periods of economic slowdown are the ideal opportunities for repositionin

commercial spaces. During times of financial strife, occupancy rates of office buildings fall and properties find that they a

competing with each other to attract tenants. The demand for corporate space is lower than the supply in times recession, resulting in a dip in construction costs as well. This allows commercial building owners to undertake th

renovation of buildings at lower rates, significantly increasing the property value and attracting high-profile occupants.

Repositioning offers the advantage of considerable saving in time and investment. The example of the Crossroa

Corporate Centre is only one of many in New Jersey in the U.S. The state has seen a number of environmental developme

constraints and also faced the issue of a lengthy approval process for the construction of new office buildings, makin

repositioning a popular choice. Apart from the Crossroads Corporate Centre, other repositioning examples in the state a

the Koll Corporate Centre and 45 Knights Bridge.

While timing the repositioning is the crucial first step, a constant challenge is to accurately predict the leasing mark

patterns. To do so, one must factor in the property’s location, facilities, layout and other commercial offerings in th

vicinity. Owners need to keep in mind that potential occupants will look to balance the best deals with the best offering

This knowledge makes tenant analysis the next crucial factor in successful repositioning.

Understanding the market

In a market with insignificant pressure on demand, occupants of commercial space are in a strong position to negotiate th

best arrangement. However, property owners should keep in mind one significant fact – potential occupants seek worl

class amenities and the best overall base of operations. Therefore, a strategic repositioning exercise must be able t

accurately balance amenities and the prestige that potential tenants are seeking.

Timing the repositioning and attracting high-profile clientele requires a well-planned pre-process analysis. According

authorities, the parties involved in background research include real-estate brokers, asset managers, architectur

consultants and construction experts. This multi-layered analytical approach proves invaluable in understanding potent

occupant demographics and expectations, repositioning cost estimates, the strength of market competitors as well a

projecting a reasonably precise return on investment.

One example of this is the CNA Centre in Chicago. Built in 1972, the 1.3 million sq. ft property was a single-tenant buildin

for many years. Recently, a change in the business direction of the owners opened 250,000 sq. ft of rentable space in th

landmark structure. Careful market analysis and a well-thought out repositioning strategy led to strategic renovation

leading to the CNA Centre being branded as a prestigious multi-tenant corporate space.

Once building owners have understood the needs and expectations of potential clients, their subsequent repositionin

strategy will reflect efforts to attract the best occupants. Based on this knowledge, owners can scale the intensity an

complexity of the repositioning exercise to showcase their property in the best manner.




Repositioning of Office Buildings – Strategic Measures and Advantages Offering the best services

Having successfully navigated the first two steps, the owner can now focus efforts on undertaking the required renovatio

of the property. The level of renovation depends on the following factors:

In a Central Business District, the presence of many prestigious commercial space offerings may result in the need for

more extensive repositioning effort. As mentioned previously, potential occupants are on the lookout for the best leasin

arrangements. Hence, the quality of services on offer will have to be considerably better to set the building apart fro

competition.

The location of the property is an important factor in the repositioning process. There is an inverse relationship betwee

the prestige of the location and the scale of renovation or repositioning required. That is to say, the better the origin

location, the lower the investment required by the owner to attract the best clients.

If the building has not undergone regular maintenance over its lifetime, the outlay required to improve the facilities will b

extensive. However, even the most contemporary designs and strenuous maintenance cannot halt the effects of climaconditions and time, resulting in older buildings eventually looking weathered.

Perhaps one of the most common elements in the renovation process is the upgrade of the building infrastructure. Owne

must ensure that an accommodating policy is in place to bring in cutting-edge technology, wherever required, on th

premises. Potential occupants will focus on the efficiency of mechanical and electrical systems in the building and prefer a

operations base that is versatile and quality-conscious. If the building is being repositioned as a superior corporate spac

employee-friendly amenities would enhance the value and demand of the building.

The perfect example of this would be 67 Wall Street in New York. Over the years, the 75-year-old building has bee

tenanted by some of the most famous global banking and financial firms. Its renovation preserved the classical beauty the building’s architecture while upgrading external and internal spaces and facilities. The 5-year long, USD $20 millio

repositioning exercise included restoring the external facade, redesigning the internal lobby, the installation of distinctiv

lighting and bettering existing mechanical and ventilation systems. Today, 67 Wall Street has been converted into

sophisticated commercial building offering cutting-edge occupant experiences.

The demand for high-

quality corporate space

The location of the

property

The extent of

maintenance

undergone by the structure

The relevance of

facilities on offer



Repositioning of Office BuildingRepositioning of Office Buildings – Strategic Measures and Advantages


Conclusion

The concept of repositioning a building is globally well-established and is steadily being incorporated in India. One of th

pioneering examples of office space repositioning in the country is Express Towers in Nariman Point, Mumbai. An icon

structure, built in the 1970s, the building is currently undergoing a renovation programme. Despite careful maintenanover the years, the edifice was in need of a strategic repositioning exercise. A partnership between ICICI Venture and th

Express Group will see restoration in the external facade and considerable improvements and additions in the intern

services. The building’s repositioning will transform Express Towers into one of the finest contemporary corporate spaces

Mumbai.

It is essential that a well-planned repositioning exercise consider the above factors during the process of renovatio

Successful execution of relevant details will greatly assist the property to vie with more contemporary buildings

attracting attention from potential occupants. In the long run, the building’s brand value will increase considerably an

provide a significant return on investment for investors and owners.

References

http://nreionline.com/commentary/lastword/real_estate_unlocking_building_value/

http://asumag.com/mag/university_design_thoughtful_repositioning/

http://huntsmanag.blogspot.com/2010/04/repositioning-commercial-office.html

http://nreionline.com/news/Austin_development/

http://www.proteusb2b.com/corporate-repositioning/corporate-repositioning.php

http://www.proteusb2b.com/work/cs-csmgroup.php

http://www.thefreelibrary.com/Repositioning+office+buildings+for+the+next+millennium.-a059704997






















Repositioning of Office Buildings – Strategic Measures and Advantages

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