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August 4, 2021

Commercial Renovation Versus New Construction

When it comes to building a new structure or renovating an existing commercial space, there are advantages that lead companies to choose to build new.  However, it is worth a hard look at renovating, whether you own the structure now or you are thinking of purchasing one.

Over the five years leading up to 2020, the Commercial Property Remodeling industry has benefited from strong overall economic growth.  Overall, IBISWorld estimated industry revenue rose an annualized rate of 4.4% to $35.8 billion despite the 11.3% decline in 2020. The outlook for 2021 is flat.

The Benefits of New Construction For Your Commercial Space

Choosing to build a new commercial space for business allows complete freedom over the design and features of the property. As an example, instead of trying to cram your employees into a small cubicle area, you can choose to have separate offices for each individual.  Opting for a new commercial space also saves you from dealing with surprises that are sometimes found during the renovations of existing commercial properties, such as asbestos or other harmful materials.

The largest long term advantage in constructing a new building is that it allows businesses to take advantage of the latest advances in energy efficiency which help save on utility bills for years to come.

The Benefits of Renovating an Existing Building

If you don’t have an extensive list of must-have or unusual features for a commercial space, finding an existing property to renovate might be the best option. Commercial renovation of existing space can allow your team to finish the project in a significantly shorter time frame compared to constructing a new building. This is especially true if you don’t need to use the building while it’s under renovation.  If you do need to occupy the space during a renovation, the job might take a little longer but it is still almost certainly faster than new construction.

Breaking Down Commercial Renovation

The cost differences between a commercial renovation and a new construction often play the biggest role in the decision-making process.

Renovating is usually less expensive.

The cost of land, materials and labor have been on the rise in recent years and shows no sign of stopping, so the cost to build a new building is almost certainly going to be significantly more than buying a comparable existing building and renovating it.  Most surprisingly, cost overruns and change orders often occur on new construction at a higher rate of frequency than on renovations.  The price of some building materials has increased 300% this year with no signs of dropping significantly in the near future.

Renovating is usually faster.  

If you buy a building and make standard improvements to it, the speed to which you can occupy it is much faster than if you do ground-up construction. Renovating generally requires far less materials and some construction materials have recently seen supply shortages. In the past year, there have been  reported shortages of materials including building sand, lumber and wallboard. While not a crisis, shortages can lead to delays. 

Renovating still allows for customization.

While renovating may not be the same as creating the dream building from scratch, many owners add significant improvements and customizations to their buildings. Many business leaders enjoy the opportunity to modify an existing building to better meet their needs while at the same time saving a great building and creating something very unique. 

Factors to Consider when Renovating a Building


New construction will generally be more expensive than renovating, but in reality, the cost comparison depends on many factors and they need to be weighed out. Renovating an older building can come with code compliance issues that are expensive to address. However, upgrading a relatively modern building with only a few changes will be far less expensive than building new construction. 


Long term Investment return is something that must be taken into consideration when planning a  budget for a commercial renovation. Any change or modification to a commercial property comes with ramifications and each design choice should be considered carefully. As an example, there are some exterior design changes that might make a large and immediate impact on sales for a business in the right location. Other  renovations may not impact sales but are likely to have a positive impact on day to day efficiencies, all things to be taken into consideration.

As another example, consider natural light, which reduces energy usage. Integrating new natural light into commercial renovation can be challenging because the existing structure may make it costly to make the modifications and, in some cases, cause discomfort and higher cooling costs. 

Project Timeframe

Keep in mind that building a structure and renovating an old building are completed on different timelines. Renovations typically can be done in a matter of weeks or a few months. Furthermore, renovations can still take place in the same space where business operations are conducted. For business owners who want to minimize the impact of their renovation on the business, this can be done by limiting the construction time to evenings, weekends or off-season dates as well as working on specific spaces at specific times to limit disruptions to  daily business activities. New building construction can take a long time. With new construction, It is only after the building is constructed that the employees can transfer to the new space.


Commercial buildings are restricted by standard building codes and other laws based  upon where they are located. For example, a building that is declared historical may not be allowed for renovation without obtaining specific permission from local building officials or agencies. On the other hand, a new commercial construction project may be greatly restricted by zoning laws in the area.

Commercial Renovation is Good for the Environment!

Adaptive reuse of commercial buildings makes sense when viewed through a sustainability lens. The building and construction industry is responsible for a significant amount of carbon emissions, reusing our buildings impacts people, the environment, and profits.

As stated in Gensler’s Climate Action by Design, by renovating existing buildings and repurposing spaces and materials, developers can decrease the amount of carbon associated with new materials, and they can reduce the amount of debris and waste going into landfills. According to the U.S. Environmental Protection Agency, deconstruction or remodel on an existing building can save 90% of a building’s materials versus demolition of a building.

Adaptive reuse is also much more cost-effective than building new. Demolition and new building costs can be side-stepped and it is now common for developers to access municipal incentives.

Why DigiBuild?

DigiBuild is a blockchain-enabled construction project management platform. Our customers manage workflows such as procurement, budgets, schedules, contracts, and payments. DigiBuild allows for collaboration across 50+ disparate construction stakeholders – all on a single platform. 

We are the first to merge our construction management expertise with blockchain technology to create the world’s most revolutionary technology bringing risk management and visibility to your projects.

Through verifiable collaboration, we eliminate risk, disputes, save time and create a healthier and happier global construction industry.

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