OMU provides sustainable outcomes for obsolete industrial and office space. Utrecht Development Agency (OMU) was founded in 2011 to actively promote the adaptive reuse and redevelopment of industrial estates and office buildings in the Utrecht region.
More than 100 hectares of industrial properties in the province of Utrecht are no longer fit for purpose. Commercial office supply also exceeds demand: at least 500,000 square metres of office space in the Utrecht region are available for sale or lease. A significant portion of these properties are obsolete: the buildings are often in excess of 30 years old, are relatively low in design quality, and/or are located in areas which do not conform to modern requirements for office space.
High vacancy rates pose a threat to the vitality of surrounding communities. Vacant properties invite vandalism, lead to added cleanup and redevelopment costs and undermine the economic viability of adjoining properties. Unless these buildings and sites are restored to useful life, continued deterioration will worsen environmental problems and weaken the economic base of the Utrecht region. In many cases, refurbishment of the existing building for continuation of the existing use is no longer viable. Adaptive reuse or redevelopment for other purposes is the only solution.
Disused properties often have plenty of potential to be made productive again. Once rehabilitated and decontaminated, they can house emerging technologies and manufacturing processes, or other uses such as residential apartments for the large numbers of people who are looking for a new home in the Utrecht region. Adapting these properties to new uses will restore not only the buildings and their physical environment, but also the jobs and vitality of the communities surrounding them.
However, working within existing built structures and existing urban environments can be a complex and challenging task. High costs of demolition and remediation of contaminated land are obstacles to productive reuse of industrial sites. Stakeholders (owners, developers, investors and end users) often have great difficulty acquiring specialized know-how, planning permission and – last but not least – the necessary funding. As a result, in many situations owners have ‘mothballed’ their land and buildings, allowing them to sit idle rather than grappling with the challenges of redevelopment.
In order to actively assist with the revitalization and adaptive reuse of obsolete industrial sites and office buildings, the province of Utrecht has created a specialized redevelopment corporation. Ontwikkelingsmaatschappij Utrecht (OMU), translated as Utrecht Development Agency, was founded in December 2011. OMU is a public limited liability company (PLC), with the province of Utrecht as its single shareholder.
OMU focuses on ‘brownfields’ (industrial land) as well as ‘greyfields’ (office buildings) in the Utrecht region that no longer attract adequate investment or tenants. OMU’s goals are to return as many of these properties as possible to productive use. In this way, OMU aims to improve urban revitalization, sprawl reduction, economic development, sustainability and environmental protection.
Specifically, OMU has been tasked to revitalize at least 5 hectares of industrial land per year, as well as reducing vacant office space by at least 10,000 square metres per year. OMU’s focus lies on private property and not on public land, which is considered to be the primary responsibility of local and regional governments.
OMU maintains an investment fund of € 15 million which is used for the following purposes:
Since its inception OMU has facilitated dozens of urban revitalization and adaptive reuse projects throughout the province of Utrecht. The difference between OMU and regular lenders and investors is that OMU is not concerned with maximizing the financial return on its loans and investments, but takes the social return potential into account as well.
This means that when assessing redevelopment proposals and funding requests, OMU specifically looks into the possibilities to enhance ‘spin-off’: for instance, the opportunities for improvement of the physical surroundings, economic vitality, environmental sustainability, and other benefits for the community. OMU is willing to accept higher levels of risk and higher loan-to-value rates than other lenders and investors, in the expectation of higher levels of social return. In short: OMU is prepared to make reuse and revitalization projects possible, when regular market forces fail to do so.
OMU’s loans and investments are generally short term (2-3 years at most) and are maximized at € 2 million per project. In some cases, OMU lends the full amount necessary for a developer to acquire a property (up to 100 % loan-to-value). In other cases, OMU works together with other financial institutions, lenders and investors (banks, private equity funds or crowdfunding initiatives) to provide specific tailor-made financial arrangements.
OMU does not provide grants or subsidies – in order to avoid state aid to the private sector, OMU charges fees and interest rates that are more or less competitive with market rates. The investment fund is a ‘revolving fund’, which means that the loan repayments and returns on investment are used to finance OMU’s continuing operations from year to year.