Repurposing assets to reduce vacancy rates

Australian researchers are exploring the potential for temporary adaptive reuse of commercial buildings that may otherwise lie vacant beyond the pandemic


  • Prof. Sara Wilkinson
  • Dr Gillian Armstrong
  • Prof. Jua Cilliers

10 December 2021

High level view of high street in Sydney, looking towards the harbour bridge

Since the pandemic began, commercial and retail property vacancy rates in central business districts (CBDs) around the world have grown. Is this a temporary situation? If so, how long will it last? And what, if anything, can we do in the interim?

The COVID-19 pandemic has certainly highlighted the fragility of city centres, as changing societal needs and associated work–life patterns have emerged globally. The PwC Australia Future of Work report shows that more than 39% of staff in the country's CBDs are highly or very highly capable of working remotely. 

During first quarter of 2021, estimated occupancy in the Sydney CBD was between 25% and 40%. After the June lockdown, however, this figure fell drastically. Some are wondering whether this new situation will become permanent. 

Addressing vacancy by repurposing assets

The evidence that urban space is changing calls for a renewed understanding of occupancy, use of space and buildings, and multifunctionality. Knight Frank's overview of the Asia–Pacific market concludes that, because 'lockdowns expose the weaknesses of income-producing properties […] a two-tiered market forms as the more resilient prime assets continue to hold their values, while the non-prime assets start to see their values deteriorate'.

In response, Knight Frank sees significant potential in asset repurposing. Asset repurposing is defined as change of use or adaptive reuse, where the original use, e.g. office, changes to another such as healthcare. The report notes that 'location, demand and local infrastructure will inform what is viable. Repurposed uses are likely to range from healthcare, co-working [or] flex space to residential (including build-to-rent) and logistics'. Although the viability of repurposing buildings varies, this is an opportunity for owners, investors and developers to meet evolving market demands. 

Coupling vacant space with high-demand uses on a temporary basis can support urban centres until markets change, without permanently disrupting supply. In addition, not all tenants seek long-term tenancies. 

In Making space for culture in Sydney: cultural infrastructure study 2020, the City of Sydney identifies uses of space that are not currently catered for by urban centres, where retail and commercial office space dominate. The research highlights the need for cultural infrastructure, defined as spaces for arts, such as galleries and museums, and for the social impact of cultural space, where people can experience arts and culture, to be valued. 

‘The evidence that urban space is changing calls for a renewed understanding of occupancy, use of space and buildings, and multifunctionality’

Researching the scope for adaptive reuse

Researchers at the University of Technology Sydney (UTS) have proposed a strategy called Sustainable Temporary Adaptive Reuse (STAR) for underused, or vacant, buildings. The STAR research is funded for three years by the City of Sydney and explores low-cost interventions to address economic, social and environmental stress.

Alongside brand repositioning and mothballing, whereby owners temporarily vacate all occupants and leave the building vacant until market conditions become more favourable for reuse or another use, STAR can offer a way to deal with underoccupancy through low-level intervention, compared with more demanding options such as demolition and comprehensive retrofitting. 

Adaptive reuse projects tend to reuse obsolete buildings that have been vacant for long periods. Although permanent change of use is the most common approach, there are examples of short-term adaptation which include temporary use for buildings scheduled for demolition. 

In each case, the building is assumed to be, or is at risk of becoming, wholly vacant. However, this assumption is unrealistic, and a more nuanced understanding of vacancy and adaptive reuse is needed. Even when vacancy rates are considered high overall, wholly vacant buildings awaiting a permanent use change can be in short supply, as the vacancy is spread across a lot of the stock. Partial or temporary adaptive reuse is likely to be more practical. 

Although adaptive reuse retains embodied energy in existing structures, being temporary it may increase construction waste with materials from former fit-outs being sent to landfill to accommodate a new occupant rather than being reused. Writing design briefs and specifications for more typical uses and unfamiliar new ones is a further challenge that requires the quantity surveyors who manage STAR projects to have advanced skill sets. These advanced skill sets include a greater awareness and understanding of what is possible in respect of temporary adaptive reuse, and retention and/or reuse of existing fit-out materials and components of the building fabric. 

Compatible use, universal design and reusable fixtures and fittings are important principles for STAR. Compatible use is defined as uses that complement existing uses in a temporary timeframe, for example, converting offices to residential uses involved completely different requirements for services layouts and are expensive to undertake. As such, this option is not suited to temporary reuse. 

On the other hand, converting office spaces to healthcare services; for example dental, skincare or doctor surgeries may be compatible. The unintended environmental consequences of temporary reuse need to be considered from the outset. Sustainability must therefore be integral to a STAR project's design, construction and making good stages. STAR's aim to keep costs low also helps minimise use of materials, fixtures and fittings. Sustainability can be enhanced by developing infrastructure that encourages reuse or recycling waste generated by project's temporary nature. This can take the form of physical centres that collect materials, fixtures, fittings and furniture stripped out of buildings for new users, as well as integrating reuse and recycling facilities in temporary fit-outs for new occupants. 

Making adaptive reuse attractive

The STAR reactivation strategy manages vacancy by seeking a diversity of new uses on a temporary basis, without permanently transitioning to new ones. 

It contrasts with a holding position that reduces economic and social activity. Excess vacancy adversely affects nearby businesses, transport services and cultural events. Ultimately, it also has an impact on a building's value and increases the risk of decay and defects. 

The options and opportunities for temporary adaptive reuse can be realised by providing a robust set of resources for stakeholders to assess potential sites. Adaptive reuse is not new – but looking at viable short-term options beyond COVID-19 is. 

Advising clients of the potential to turn an underused or vacant asset into a STAR project is a worthwhile strategy. STAR will be publishing resources in 2022 for this purpose.

Sara Wilkinson FRICS is professor of sustainable property at UTS

Contact Sara: Email

Gillian Armstrong is a research associate in the School of Built Environment at UTS

Contact Gillian: Email

Jua Cilliers is head of the School of Built Environment at UTS

Contact Jua: Email

Related competencies include: Sustainability

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