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The ‘Great Repurposing’ of commercial real estate

For decades, large and medium-sized companies in Texas and across the country placed their headquarters in massive downtown buildings. From the 1960s through the 80s, suburban office parks became all the rage for businesses wanting to provide a campus-like environment for hundreds or thousands of employees.

But the pandemic hastened a trend already underway before COVID-19 as more and more Americans sought an improved work-life balance. Working from home became more common during the past two years mainly by necessity and is not going away. The big question now is, “what will happen to all those large, empty or nearly-empty buildings and enormous tracts of land that were once bustling workplaces?”

Investment opportunities for commercial land

Douglas A. Kiersey, Jr., the president of real estate management firm Dermody Properties, calls the current period “The Great Repurposing.” He told the New York Times that commercial properties are  impacted by two fundamental changes; remote workers and e-commerce.

But while more employees work from home, the need for office buildings is not going away anytime soon. Instead, companies are looking for upgraded properties that provide amenities for those who still work in the office, including meeting rooms, common spaces, restaurants and coffee houses.

Many downtown buildings and suburban office parks can be retrofitted to meet today’s needs with many of those features added. However, experts believe other sites will have new purposes, including apartment complexes, warehouses, senior living centers or even schools.

The advent of RSG and ESG

More investors, governments and citizens are focusing on lowering emissions and setting climate goals for large commercial properties by pressuring energy companies to produce responsibly sourced gas. RSG is natural gas produced under the highest standards minimizing environmental impact, verified by an independent third party.

Chevron announced it would market its first RSG during the second half of this year after production assets in the Midland Basin in the Permian and Colorado have been certified. RSG is one component of ESG investing, which considers environmental, social and governance factors. ESG investors look at several factors beyond maximizing profits for shareholders. Many CRE investors see the repurposing of legacy buildings by utilizing responsibly sourced gas as a way to meet their social objectives.