Renovate or build? the $MM question

As facilities age and usage and programmatic needs change the million dollar question always comes up. Which is the best solution? Renovate or build new?

With changes in design standards the cost of new construction increasingly trends toward being less expensive than the cost of renovating. That said... that consideration alone is not consistent enough to lead to the formulation of a generic definition about where the “butterfly line” is, (where new construction makes more sense than renovation every time). Every situation must be evaluated on its own merits. The older a building is, the more severe the challenges are to bring it up to today’s standards and codes. Every building passes a point in time where the cost of renovation makes a reasonable return on the investment virtually unattainable.

The circumstances that make renovation less attractive are:

• Environmental issues such as asbestos, lead paint and mold.
• Fire code issues such as lack of egress and fire separation requirements.
• Design inadequate for current needs and difficult to correct such as small classrooms, hallways, gymnasiums etc. typically defined by structural walls in older buildings.
• Hidden construction issues where more work must be done than anticipated.
• Materials in the original building such as old electrical systems, cast iron pipes, asbestos, lead paint and plaster which are no longer used in mainstream construction, thus making them much less desirable as salvageable elements due to the excessive cost required to repair or replace them.
• The scope of renovation work is difficult to define in drawings and specifications, thus making the architectural and engineering services more expensive because they require more time. Concurrently, the bidding of the work is not as accurate because the bids are based upon the same drawings and specs, thus a larger contingency is required to be budgeted to cover errors and omissions.

The assets of a building which make renovation more desirable are:

• Historical value of the building.
• Emotional attachment by the community.
• The original design is close to being what the new function requires per today’s standards. (warehouse, office building or mall)
• The location is such that restoration is intrinsic to the value of the renovated building.
• Environmental issues have been dealt with previously or are minimal.
• The original construction is superior in quality to the point that the building’s major elements currently have a life expectancy of another 30+ years; such as concrete framing, terrazzo floors, large windows, or well maintained wood features such as architecturally accurate doors and cornice work.
• The original building has been both well maintained and been a building where it has not had chronic mechanical, roofing or plumbing system problems such as leaks, mold or other environmental and health related issues.

Most buildings fall into one category or the other if considered objectively. While new construction provides a set of “known” results which are more predictable, there is often a loss of emotional connection many communities have with older historical buildings.

In summary a thorough evaluation by design and construction professionals taking into consideration ALL the variables is crucial in making the most overall favorable decision.