rethinking value creation in aging places and spaces By Investing.com

JLL identifies $1 trillion is needed to revitalize office space at risk of obsolescence as part of shaping a more resilient built environment

CHICAGO, Nov. 19, 2024 /PRNewswire/ — The global commercial real estate market continues to rapidly evolve as shifting preferences for how space is used and where development takes place conflate with tightening sustainability requirements, strained national and local finances and infrastructure. JLL‘s (NYSE: JLL) latest research “ Opportunity (SO:) through obsolescence,” is the first in a series of articles exploring the multifaceted opportunities found in assessing existing challenges in the built environment “ including age and design, regulatory pressures and location “ and turning them into value and returns.

JLL finds that of the 776 million square meters of existing office space across 66 markets globally, about half of that space, or 322-425 million square meters, is likely to require substantial investment to remain viable in the near term “ an investment of approximately $933 billion-$1.2 trillion in spending. Proactive engagement to retrofit and update existing assets will be key to unlocking opportunities for value creation through strategic investment and adaptation, particularly in the U.S. and Europe, where 78% of office product and 83% of necessary capex is found.

“The commercial real estate landscape is at a turning point as property owners and cities look to establish long-term viability of existing buildings and districts, in the face of evolving experiential and spatial preferences, increasing regulatory pressures, climate risk and changes in real estate demand,” said Cynthia Kantor, CEO, Project & Development Services, at JLL. “By proactively assessing and addressing outdated and at-risk buildings, owners can unlock significant value, create a more sustainable, resilient built environment and drive future returns.”

“The full potential of existing assets, both those nearing the end and earlier in their lifecycle, can only be realized through collaboration between stakeholders and by considering how various levels of obsolescence interact,”  said Phil Ryan, Research Director at JLL. “Owners and cities should assess how their portfolios holistically fit into their respective built environments and how a variety of factors contribute to their ability to respond to changing locational preferences and new sustainability and development regulations to create future value.”

Considering the…