Mixed-use and reversibility of buildings, an ambition for tomorrow's city

Expert

Combining the creation of tangible and intangible value

The question for building owners is simple: do reversibility and mixed-use make economic sense? There's no doubt about the intangible value of mixed use and reversibility, but an owner naturally wants financial value to prevail. How can we reconcile the creation of tangible and intangible value?

The office building as the pivot of a new model

The current situation is one of supply struggling to meet demand. Office buildings offer too many sq.m. for market needs. However, we're talking here about a need for space dedicated exclusively to offices. At the same time, students are in desperate need of accommodation, many schools are looking for premises, businesses are looking to set up in dynamic locations and senior citizens are looking for suitable residences. These are just a few examples of the massive needs that will continue to exist, and they illustrate the relevance of thinking in terms of mix and reversibility.

Rehabilitating an office building means offering it different simultaneous and/or consecutive uses. A project to convert an office building to other uses is always technically feasible, but in most cases, it's the economic interest that remains at the very least risky, if not unthinkable. However, the creation of economic value can be achieved through the creation of use values, in other words, the ability of a building to meet the needs of the area in which it is located. In the case of a building with different uses, the “office” function, which is not destined to disappear, can be complemented by other functions to create a varied offer. Many players will find in this concept the ambition to “open up the building to the city”, which, without a mix of functions, is very difficult to achieve.

Owners as players in the urban fabric

Mixed-use doesn't just appear to be a theoretical framework that satisfies a societal ambition; it is also an important way of increasing the financial value of an asset where supply meets demand. The city is a living, evolving object. Real estate is a long-term business. Consequently, thinking in terms of mixed-use and reversibility is a revolution in the way we think about urban development, in the sense that buildings adapt in a short space of time to changes in their urban context. Tomorrow's real estate can no longer be fixed in the long term, as uses and needs evolve within short timeframes. Thinking of real estate in terms of mix and reversibility means creating the conditions for faster reaction, and ideally even anticipation. Property owners thus play a central role in the urban fabric, as they ensure that their building is consistent with the area in which it is located. 

A concrete example of implementation 

In the western suburbs of Paris, just a stone's throw from Mont-Valérien, in a building complex served by a tramway that quickly connects to La Défense, a former owner-occupier has decided to leave a building and sell it or add value to it. These 15,000 sq.m of office space appear to be difficult to value in the short and long term, given the low demand in the suburbs. The question is therefore to know under what conditions this building can be valued in a context of redefined supply. With a focus on the growing needs of the higher education and student housing sectors, the avenues of valorisation lead to an opportunity for the owner to bring together material value and use value in the service of strong demand and relevant urban production. This project mobilizes a wide range of players, including building experts, asset valuation consultants and education experts. This example highlights the fact that mixed use and reversibility do indeed correspond to a demand from owners and investors, that it is possible to consider them as sources of added value, and finally that they contribute to highlighting a necessary long-term vision, which ultimately comes down to thinking about the very essence of real estate. 

Release date: October 2024