Empty Class B and C commercial buildings are often seen as stranded assets that property owners struggle to manage. In such cases, two options typically arise: repurposing the building or demolishing it to make way for a new structure that is more appealing to prospective tenants. Both options require careful consideration of various complex factors.
Repurposing a building can be costly, leading many property owners to seek incentives from local governments.
In 2021, Calgary introduced the Downtown Development Incentive Program (DDIP) to address this issue. The goal was to convert six million square feet of vacant office space into residential units by 2031, which would also help increase the downtown population by 20%. Property owners and developers were offered grants of $75 per square foot of converted space and expedited development approvals.
The initial funding for the program was fully allocated, and it was revived in September 2024 with similar terms, offering up to $15 million per project.
The federal government has also become involved. In November 2023, it announced that six surplus federal properties would be converted into more than 2,800 new homes in Calgary, Edmonton, St. John’s (N.L.), and Ottawa. However, as noted in earlier discussions, conversions are not always feasible or cost-effective.
For example, buildings smaller than 25,000 square feet may lack the necessary scale to justify conversion, making them less attractive to property owners. Older buildings with outdated floor plans, plumbing, windows, and ventilation can also complicate conversions, raising costs.
Architectural and design firms like Gensler are offering guidance to owners considering repurposing options. However, in some cases, demolition may be more practical than conversion, despite the environmental benefits of repurposing. In premium urban areas, property owners may be able to command a higher leasing premium for a newly constructed, space-efficient building tailored to modern needs.
If demolition is the chosen route, the focus shifts to finding the most effective process. This has led to the rise of “building material circularity,” a concept popularized in Europe. Material circularity advocates for a closed-loop, regenerative system, as opposed to the traditional linear approach that leads to large amounts of waste being sent to landfills.
One example of material circularity can be seen in the UK, where a new eight-story office building near London’s Piccadilly district is being constructed using reclaimed materials from a nearby 40-year-old building. These reclaimed materials include Portland stone, granite, marble, and timber handrails.
To facilitate large-scale material reuse, discussions are underway about “Material Passports”—detailed records of the construction materials used in a building. These passports provide crucial information about the materials’ composition, their potential for reuse, and their recycling options.
Material passports would enable developers to identify donor buildings in advance and design new projects around the materials available for reuse. This approach could lead to selecting components that can be easily separated and reused without damage, with designs that make dismantling and recovery easier. Supporting building material circularity could also serve as a marketing tool for project owners, showcasing their commitment to sustainability.
In Europe, “Digital Product Passports” may eventually be required by law. However, the use of material passports remains rare in Canadian construction. While interest in the concept is growing, it is still considered an emerging practice with no regulations in place to mandate their use in most construction projects.
This represents a missed opportunity for Canada, where the construction sector is responsible for one-third of the country’s total solid waste. According to the report Accelerating the Circular Built Environment Sector in Canada Workshop by Circular Economy Leadership Canada, applying material circularity principles to Canada’s construction and real estate sectors could yield significant benefits.