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Home > Lowe's for Pros > Planning for a Commercial to Residential Conversion

Planning for a Commercial to Residential Conversion

By Jenn Danko

When Robert Fung, president of The Salient Group, a real estate development group in Vancouver, B.C., set out to convert a 102-year-old commercial warehouse space into a residential building, he knew there would be challenges. Fung had to consider the structural nature of the nine-story building, which was being expanded in a seismic area prone to earthquakes. He also had to do other things like confirm if the bricks in the former rubber factory were solid and intact enough to be used. From understanding the historic elements of the building to working closely with the city council during the bidding process, Fung navigated the 18-month process and oversaw an award-winning commercial-to-residential conversion.

For this project, Fung added two stories, re-engineered and seismically stabilized the entire building and refurbished the historic buildings. He also wanted to keep the original fir floors and exposed brick and massive beams, a rarity in Western Canada, but modernize the interior and blend new construction atop the original building with penthouses and a rooftop fireplace and gathering space. “We always want to use the existing structure and show off the historic elements,” Fung says. “And when we put in new stuff, we want to make sure the new looks new, and do it really well.”

In the end, The Salient Group converted Bowman Block, located in the Crosstown neighborhood of downtown Vancouver, into an 11-story building with 38 homes, a mix of sub-penthouses, penthouses, single and double-height lofts.

If you’re considering converting a commercial structure into a residential building, like Fung did, here are several factors to consider during the planning phase.

Assess the Building’s Usage

Gordon Wilson, president of G Wilson Construction Co Ltd, a general contracting firm in Vancouver, B.C., has converted his share of commercial buildings into living spaces. First assess, a building’s potential usage by actually looking at the space. Does it lend itself to a renovation? Can it be converted into a functional space for housing? It’s important to compare the return on investment for making it residential compared to the return on investment if it used commercially, Wilson says, which can change according to public demand.

Know What the City Wants

Just because a building may have theoretically outlived its current use doesn’t necessarily mean that the city is on board with the conversion, Wilson says. With residential property taxes often far less than commercial ones, municipal parties must agree with the intention of any project use before moving forward.

“To convince the city that you want to convert a space, there has to be good reason,” Wilson says, adding that reason usually comes down to money, i.e. property tax revenue. To navigate the process, Wilson recommends hiring professional consultants, architects and engineers who have “dealt with city hall many, many times on zoning and building issues.”

Just be aware, that if the city has not yet decided what it wants to do with the property, the contractor may be left at a standstill, Fung adds.

Still, in a place like Vancouver where the city has grown away from the historic downtown, one’s chances might be better since the “city needs investment there,” Fung says. “The city also has to consider the potential revenue it is going to gain on a residential building,” Fung says.

Speak in Code

Even if the city green lights a project, code upgrades will be inevitable — and costly, Fung says. Get a code consultant involved early in the process, Fung recommends. Then, develop a good relationship with the head the city’s building department and the inspector so you can see their approach to gray areas of the building code, Fung recommends. For example, in Vancouver’s downtown area, the number of parking spaces required for a commercial building is different than is required of a residential one. “Converting a commercial space into a residential one could be financially catastrophic for a contractor going into the situation blindly, so it’s important to know the extent of full code upgrades in all aspects,” Fung says.

Team Up

Contractors taking on a conversion can expect to work closely with both the architect and engineer while moving a proposed project through the municipal channels, Wilson says.

“The architect would be the lead person to deal with when it comes to securing permits, requesting zoning changes—they understand the requirements best,” Wilson adds. Both the architect and developer are integral in helping the contractor understand the existing fabric of the building when planning the logistical side of the conversion, Fung says. Sometimes, this means x-raying for rebar — or reinforced steel — which will be necessary when dividing more open space into smaller, residential units. “Understanding structure is a prime consideration to any project,” Fung says, which is why a contractor, architect, and developer must work in a fully integrated fashion. “Structure can throw you curve balls. If the entire team is not integrated, it can result in more costly problems in the long run.”

While converting an older, commercial space into residential units can be financially beneficial for a contractor, the planning pitfalls are many, Fung says. Knowing what you are getting into before the wrecking ball hits is key to a project’s success.

“For the person with the right mind set, converting a space can also be a game changer for a neighborhood experience and economic resurgence,” Fung says.

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