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Are you interested in the comparison of urban development and retrofit?
Our debate today works with the article titled The economics of adaptive reuse – Comparative cost analysis of revitalization vs demolition and construction at Radex Park Marywilska from 2025, by Janusz Sobieraj, Marcos Fernandez, and Dominik Metelski, published in MDPI Buildings journal.
This is a great preparation to our next interview with Harriet Shing in episode 394 talking about the government’s perspective on urban retrofit vs new development.
Since we are investigating the future of cities, I thought it would be interesting to see a comparison of adaptive reuse and demolition and development. This article proposes adaptive reuse as the optimal strategy for sustainable urban development, reinforcing the importance of preserving existing structures and integrating circular economy principles.
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Welcome to today’s What is The Future For Cities podcast and its Research episode; my name is Fanni, and today we will introduce a research by summarising it. The episode really is just a short summary of the original investigation, and, in case it is interesting enough, I would encourage everyone to check out the whole documentation. This conversation was produced and generated with Notebook LM as two hosts dissecting the whole research.
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Speaker 1: When you look at these massive post-industrial complexes, the defunct factories and sprawling warehouses that pepper our cities planners face a really fundamental choice. Do we knock it all down and build some high spec modern replacement, or do we save what we have and adapt it for a new life?
Speaker 2: That choice is right at the heart of this critical strategy we call adaptive reuse, especially as it applies to sustainable urban development in regions like Central and Eastern Europe.
Speaker 1: Our discussion today comes from a really rigorous quantitative study of the Radix Park Mayor Vka Project in Warsaw, Poland. This was a revitalization effort between 2005 and 2010. That actually measured the financial and environmental outcomes of adaptive reuse against a carefully built hypothetical baseline of demolition and new construction.
Speaker 2: That data gave us this concrete measure. The researchers called the revitalization advantage. Basically a combination of upfront cost savings and environmental benefits. So that brings us to our essential question today. Does this quantifiable advantage, this number fully capture the optimal long-term economic strategy for these sites? Or does new construction despite its higher initial investment, actually secure a superior more enduring market value and functionality?
Speaker 1: I’ll be arguing that the evidence from RAD X Park is well, it’s demonstrably clear. Adaptive reuse is the economically and environmentally superior strategy. It’s validated by superior profitability and strategic resource conservation metrics. It is simply put the pragmatic choice.
Speaker 2: I’m gonna argue that while it’s certainly efficient, that measured advantage is incomplete, and I think potentially unsustainable in the long term. It’s fundamentally constrained by missed opportunities for maximizing market value. And crucially, it excludes the complex social factors you need for truly sustainable urban
Speaker 1: renewal. kay, so let’s look closely at the numbers that define this efficiency. The Rads Park Mary Wilsker case study. I mean, it provides powerful proof of Revitalizations fundamental success when you tally up the direct financial and environmental savings. The total combined benefit, the revitalization advantage was substantial. It amounted to over 41 million PLN.
Speaker 2: That is indeed a major headline figure, but let’s break down how that figure was built.
Speaker 1: Nearly 28 million PLN of that came from direct cost savings. That represents a huge capital expenditure reduction of almost 57% compared to what new construction would’ve cost. And more strategically, the researchers developed the savings ratio, which really acts as the key measure of efficiency.
Speaker 2: A metric, which Retic Spark came in at 1.93
Speaker 1: exactly. This ratio is critical because it tells us that every single PLN one invested in the Adaptive Reuse project generated PLN 1.93 in combined financial and environmental benefits. So this wasn’t just, you know, cheaper, it was exponentially more effective in how it deployed capital and resources.
Speaker 2: I acknowledge the capital efficiency is spectacular, but I come at it from a different angle, that superior profit, it relies almost entirely on successfully avoiding capital expenditure, not on maximizing future income potential, which I would argue is the true measure of a long-term commercial asset.
Speaker 1: That risk mitigation is the long-term benefit, especially in a volatile market context like that. But look at the
Speaker 2: gross revenue. The hypothetical new construction secured a 40% higher rental premium throughout the entire 15 year period. They analysed from 2010 to 2025. This premium generated a present value of income for the new builds, totalling over 62 million PLN compared to just under 45 million for the revitalized properties. I mean, that is nearly an 18 million PLN gap in potential gross revenue that adaptive reuse simply could
Speaker 1: not capture. I see why you’re emphasizing that premium, but let me offer a different perspective. That income gap is already factored into the superior net present value calculation. Over 15 years, the revitalized buildings generated a net profit of over 23 million PLN that has nearly doubled the net profit of only about 12.9 million. Generated by the hypothetical new construction superior net profit proves revitalization is fundamentally more valuable as an investment.
Speaker 2: The superior net profit is undeniable, but it results from a strategic choice to minimize input, not maximize output. That persistent 40% higher rental gap reflects a fundamental market advantage for truly modern facilities. You know, the ones with superior technical systems, maximum flexibility, and the high potential for bream or lead certifications that tenants are demanding today.
Speaker 1: That’s a cost benefit analysis. The high profitability of adaptive reuse lets developers move faster with far less risk, which is a crucial strategic advantage in the often capital constrained CEE regeneration sector. The certainty of a 23 million PLN profit is strategically better than the uncertainty of a potentially higher gross revenue from a project that needs double the upfront capital.
Speaker 2: I understand the importance of a quick ROI. That line of reasoning suggests the revitalized asset is inherently second tier, and we actually see evidence of this functional compromise in the data. Two key buildings, B one and I one, suffered significant reductions in usable floor area up to 10.5% in one case because of the unavoidable need for partitioning and integrating existing structural constraints for modern office use.
Speaker 1: Those were minor area losses. They were marginal trade-offs for preserving the core structure and saving 28 million PLN in demolition and construction costs. The tenants clearly found the space functional enough to drive that 23 million net profit, but those constraints limit
Speaker 2: future adaptability. The new construction is projected to see its premium only decline slightly to maybe 20 to 25% after 2025. It doesn’t disappear. That strongly suggests that paying the higher initial capital expenditure translates to a higher quality, more enduring asset that maintains market value. Long after the initial novelty of the revitalization wears off, the revitalization advantage is front-load. The new construction advantages sustained by superior functionality.
Speaker 1: If we step back from the pure rental income debate for a moment, the overall success here really hinges on the environmental side, which the study systematically monetized. We just cannot overlook the staggering environmental efficiency that was achieved at RAD X Park.
Speaker 2: The raw numbers on material diversion are certainly impressive.
Speaker 1: More than impressive. They are strategically crucial. The preservation effort prevented over 48,000 tons of CO2 emissions and diverted over 72,000 tons of building waste from landfills. The success aligns perfectly with mandatory EU circular economy targets. That provides long-term regulatory advantages that were calculated and monetized as 13 million PLN in avoided environmental costs.
Speaker 2: Okay. That is a compelling argument, but I have to push back on that environmental cost calculation because the context of the study, 2005 to 2010, it radically changes the baseline.
Speaker 1: The methodology was sound. The sheer magnitude of those calculated cost savings is heavily influenced by the specific energy matrix in Poland at that time. The emission factors they used, especially the reliance on coal intensive production for base materials like concrete and steel. It just significantly amplifies the perceived savings from avoiding new production. Concrete production, for example, generated 0.4 tons of CO2 per ton of material under that baseline.
Speaker 2: The comparison was rigorous. It utilized the region specific data for that time period to ensure accuracy against the actual hypothetical alternative. But what we’re doing is measuring the efficiency of adaptive reuse against the inefficiency of the local energy sector 15 years ago. If we reran this analysis today. Comparing adaptive reuse against a highly efficient, modern green building that was constructed using low carbon materials and supplied by a rapidly cleaning energy grid. Well, the environmental differential would likely be much, much narrower,
Speaker 1: even if the carbon premium shrinks in the future. The immediate tangible benefit of diverting over 72,000 tons of physical waste is an undeniable success for circular economy principles. Right now, that material has already been saved from landfill, regardless of future grid cleanliness. That benefit is non-negotiable, and it provides immediate relief to overburdened urban waste infrastructure.
Speaker 2: That’s true. The material preservation is a significant win, but if we are seeking the optimal long-term strategy, we have to turn to the one major area. The study explicitly omitted comprehensive social costing.
Speaker 1: The study did note the project generated 320 direct jobs across the four buildings analysed. It supported roughly a thousand workers across the wider business park. Those are tangible social benefits.
Speaker 2: Job creation is a positive metric, but the study cautioned that it focuses only on tangible benefits. It explicitly omits a rigorous assessment of social costs or benefits, what they call BS and long-term quality of life metrics or QL in the final savings ratio calculation.
Speaker 1: And what specifically are you referring to when you cite those social costs?
Speaker 2: I’m talking about things like displacement pressure on surrounding residential areas, gentrification, and the lack of comprehensive integration into new public transit or social infrastructure, excluding these complex, nuanced issues, it overlooks what some people call the revitalization paradox, a financially efficient project that simultaneously erodes the long-term social equity of the neighbourhood.
Speaker 1: That’s a compelling argument. Have you considered that the studies focus on direct material preservation inherently delivered certain social capital benefits? Preserving the original wafa pump factory structure, for instance, reinforces neighbourhood identity and connects the past to the present economic function.
Speaker 2: Preserving heritage is intangible. Increased housing costs and a lack of community amenities are very tangible social deficits.
Speaker 1: Yet the project success model hinged on fostering social integration through a diverse mixed use SME focused tenancy. This fosters economic integration supporting local businesses that might be excluded by higher spec, high rent, new builds. The labour intensive restoration also supports specialized local skills. The argument that the project is socially deficient because it lacked a formal QL score just ignores the inherent community and economic cohesion delivered by transforming a degraded area into a functional, diverse hub.
Speaker 2: It means we lack the full picture needed to declare this the optimal long-term strategy. The study itself noted that these piecemeal projects often fail to decisively alter broader market and social perceptions. We need a standardized way to measure these social externalities, affordability, integration. To ensure that the financial efficiency of adaptive reuse doesn’t come at the expense of genuine social sustainability.
Speaker 1: So in the end, the rigorous quantitative comparison performed at Rad Acts parp Mary Wilke confirms that adaptive reuse is the optimal, pragmatic strategy for post-industrial sites, especially in central and Eastern Europe. It delivers substantial immediate financial returns. A 23 million PLN net profit that significantly outperforms new construction while providing critical monetized environmental stewardship evidenced by that impressive 1.93 savings ratio. Policymakers have robust evidence here to institutionalize this revitalization advantage assessment. And prioritize resource conservation over capital intensive, high emission new construction.
Speaker 2: And I’d argue that while adaptive reuse excels brilliantly at minimizing upfront costs and dramatically cutting material waste. The sustained 40% higher rental premiums and superior functional integration of new construction signal a persistent enduring gap in maximizing long-term market value. Future evaluations have to move beyond immediate capital efficiency and integrate a full accounting of social outcomes. To ensure that revitalization achieves genuinely sustainable and equitable urban growth, rather than simply settling for the most efficient economic return.
Speaker 1: The source material provides robust evidence for the immediate, tangible efficiency and profitability of adaptive reuse. But the debate certainly remains critically open regarding its ability to secure the highest possible long-term market premium, and fully address the complexities of a holistic urban renewal.
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