Insights / October 2026

Building Less, Transforming More: What Adaptive Reuse Reveals About Market Incentives

At Building Less, Transforming More in New York, architects, an engineer, and policymakers explored why transforming existing buildings requires more than good design. Their discussion reveals how economic incentives in…

By Hisashi Miyao October 27, 2026

At a forum on transforming existing buildings, architects showed what design and engineering can make possible. The discussion that followed asked a harder question: What happens when a valuable solution does not fit the economic incentives of the people making the decision?

By Hisashi Miyao | H. MIYAO CORP.

On October 22, 2026, I attended Building Less, Transforming More at Scandinavia House in New York, part of Archtober, the city’s annual architecture and design festival.

Presented by the Consulates General of Denmark, Finland, Norway, and Sweden in New York, with support from the OBEL Foundation, the event brought together Nordic architects and designers, a structural engineer, researchers, advocates, and New York policymakers to examine the future of existing buildings.

The question was straightforward: Rather than continually demolishing and rebuilding, how can we make better use of what already exists?

The afternoon began with four Nordic practitioners presenting their approaches to transformation and adaptive reuse, followed by a moderated discussion. A second session, From Practice to Systemic Change, explored financing, regulation, and the economic structures that influence decisions about existing buildings.

What interested me most was the relationship between those conversations. The projects demonstrated what architects and engineers can achieve. The later discussion raised a different question: Why are these approaches not adopted more widely?

Rethinking What Needs to Be Built

Danish architect Dorte Mandrup described a sustainability approach that begins well before the selection of building materials.

Her practice considers life-cycle assessment, operational energy, material use, and the potential to transform existing structures. Keeping a building is not automatically the best environmental decision. Its condition, the interventions required, and its future performance all need to be evaluated.

One of her more interesting points concerned the use of space itself.

Before adding square footage, an architect can question whether a client needs that much space. Could the same area accommodate different activities throughout the day? Could a building remain flexible enough to serve purposes that have not yet been determined?

Among the examples she presented was Jægersborg Water Tower, completed in 2006 near Copenhagen. The former water tower was converted into a mixed-use building, with student housing on its upper floors and a youth center below. New residential units extend outward from the original structure, providing daylight and usable living space.

The project illustrates how transformation can involve more than preserving a building’s appearance. It can change how the structure functions and how people experience it.

Making Reuse Something People Want to Choose

Thomas Liu, a partner at Norwegian architecture firm Atelier Oslo, approached the subject through the architectural and cultural qualities of existing buildings.

An older building may have unconventional spaces, structural features, imperfections, or layers of history that would be difficult to reproduce in a new development.

One example was Rotterdam Central Library, which Atelier Oslo is renewing and extending in collaboration with Powerhouse Company and LundHagem. The project is ongoing, with reopening planned for 2027.

During the discussion, Liu made a point that stayed with me.

Rather than asking clients to renovate because they should, architects need to make transformed buildings desirable enough that clients want to choose them.

Environmental responsibility may be a reason to consider an alternative. But functionality, experience, architectural character, and design quality also influence whether it becomes the preferred choice.

The existing structure is not necessarily something to overcome. Its particular qualities can become part of what makes the project valuable.

Designing for a Second Life

Swedish architect and designer Pernilla Ohrstedt approached reuse from a different perspective: the short lifespan of temporary environments.

Her work includes architecture, exhibitions, interiors, and installations designed for events that may last only days or even minutes.

She described fashion-show environments created with borrowed or reusable materials, allowing components to return to circulation after the event.

She also discussed her work with Knoll, the American furniture brand, on adaptable showroom environments.

Knoll’s New York flagship showroom was developed in collaboration with Knoll’s Jonathan Olivares and material and color specialist Salem van der Swaagh. Its metal-mesh curtains and flexible spatial arrangements allow furniture displays to evolve without requiring the entire environment to be rebuilt.

For a furniture brand, the challenge is not simply to create an impressive showroom. It is to maintain a compelling presentation as products and collections change.

Ohrstedt’s Love Ever After, displayed in Times Square from February 4 to March 4, 2025, took the idea further.

The installation won Times Square Arts’ annual Love & Design Competition. Presented with curatorial partner The World Around, led by the event’s moderator Beatrice Galilee, and collaborator Billion Oyster Project, the work formed a large geometric heart using metal mesh associated with oyster reef cages.

Its components were intended to become oyster research stations in New York Harbor following the temporary exhibition.

The subsequent use was part of the original design, rather than something to consider after the installation ended.

For businesses involved in trade shows, retail environments, temporary exhibitions, and brand activations, this introduces a useful question.

The public experience may have a fixed end date. Does the value created by the materials and design have to end at the same time?

Engineering and the Reality of Commercial Constraints

Nicholas Ceme, a structural engineer with Finnish company Peikko, brought the discussion back to the technical realities of adaptive reuse.

His examples demonstrated how structural engineering can make it possible to adapt older buildings for new uses.

One was Duffey Lofts in Minneapolis, documented as a Peikko project reference. The 188-unit mixed-use development transformed three historic warehouses into residential, retail, and parking spaces.

In Building B, Peikko’s DELTABEAM system was used to provide additional headroom and a lightweight structural solution within the constraints of an existing building.

Such projects require engineers to evaluate the condition and capacity of existing structural elements, understand new loading requirements, and determine how new systems can be incorporated.

These considerations affect both technical feasibility and construction cost.

Ceme also emphasized the practical importance of time and money. A developer may support adaptive reuse in principle while still needing to justify the cost of assessing, modifying, and retaining the existing structure.

This brought the afternoon toward the central question of the second session.

When the Economics Favor Demolition

The second discussion brought together Josiane Schmidt, Policy Coordinator and Campaign Manager at HouseEurope!; Jorge Otero-Pailos, Director and Professor of Historic Preservation at Columbia University’s Graduate School of Architecture, Planning and Preservation; and Laura Popa, Deputy Commissioner for Sustainability at the New York City Department of Buildings.

Both sessions were moderated by Beatrice Galilee, founder and executive director of The World Around.

Schmidt described a central obstacle to the wider adoption of adaptive reuse.

Architects may possess the knowledge and technical capability to transform existing buildings, yet clients and developers may still find demolition and new construction financially more attractive.

A new development can potentially provide additional rentable floor area. Its risks may be more familiar to lenders, and the financial return may be easier to demonstrate.

In such circumstances, an architect’s ability to design an effective renovation does not necessarily determine whether the project moves forward.

HouseEurope! advocates changing the economic conditions surrounding these decisions.

Its proposals include tax incentives for renovation and material reuse, a different approach to assessing existing buildings, and greater recognition of embodied carbon in construction decisions.

Embodied carbon refers to greenhouse gas emissions associated with building materials and construction processes throughout a building’s life cycle, including manufacturing, transportation, installation, maintenance, and disposal.

An existing structure represents materials and construction processes that have already taken place. Retaining usable elements can avoid some of the additional emissions that would arise from producing replacement materials and constructing a new building.

Those avoided future emissions may have social and environmental value without producing an equivalent financial return for the individual property owner or developer.

This does not establish that every renovation is environmentally preferable to new construction. The answer depends on the condition of the building, the extent of renovation, future operational performance, and the alternatives being compared.

HouseEurope!’s argument is that the relevant costs and benefits should be assessed more fully when making that comparison.

The organization received the 2025 OBEL Award for its efforts to promote systemic change in the built environment. The OBEL Foundation also supported the October 22 event.

HouseEurope!’s European Citizens’ Initiative, Power to Renovation, closed its signature collection on January 31, 2026. The European Commission recorded the collection as unsuccessful on April 7, 2026, after it failed to reach the required one million signatures.

The recognition received within the architecture community and the unsuccessful signature campaign represent different outcomes. The latter does not establish why broader public mobilization fell short.

It does, however, illustrate that advocating for a different development model and achieving institutional change are separate challenges.

Is the Problem Education or the Economic System?

Jorge Otero-Pailos added another dimension by questioning how architecture is taught.

He argued that architectural education remains heavily oriented toward new construction, even as working with existing buildings has become a substantial part of professional practice.

Older structures may require knowledge of construction methods and materials that differ significantly from those used in contemporary buildings.

Understanding and assessing existing structural systems, including older masonry or cast-iron elements, demands expertise that may not receive sufficient attention in conventional training.

Schmidt acknowledged the importance of those skills but challenged the idea that education alone could resolve the problem.

Her argument was that an architect may understand how to preserve and transform a building while the client’s financial interests still favor replacing it.

The two perspectives point to different obstacles. One concerns the ability of professionals to identify and execute alternatives. The other concerns the conditions under which clients are prepared to select them.

Even excellent design and technical expertise may struggle to overcome unfavorable financial incentives. Conversely, policies encouraging renovation cannot make an unsuitable or structurally unsafe building appropriate for every new use.

New York: Regulation Creates Pressure, but Financing Still Matters

Laura Popa brought the discussion into the New York City context.

Under Local Law 97, most buildings larger than 25,000 square feet are subject to greenhouse gas emissions limits beginning in 2024, with stricter limits taking effect in 2030. Some buildings, including certain affordable and rent-regulated properties, follow different compliance pathways.

The law primarily addresses emissions associated with operating buildings. It is not a general requirement to retain existing structures rather than demolish them.

Nevertheless, it changes the economic considerations facing building owners.

Owners must evaluate the costs of compliance, technical upgrades, financing, and the potential consequences of delaying improvements.

Popa noted that large real estate organizations often have specialized teams capable of addressing these issues. Smaller owners may face greater challenges obtaining technical expertise and capital.

She also discussed situations in which existing lending arrangements can complicate financing for building upgrades.

These financial constraints are recognized within the regulatory framework itself. Local Law 97 includes mechanisms through which eligible owners may request adjustments for external or financial constraints.

NYC Accelerator, a city-backed program, provides free technical assistance and guidance on compliance, financing, and available incentives.

Such assistance can reduce barriers, but it does not eliminate every financial or operational challenge.

The discussion also made clear that sustainability and housing affordability cannot be considered in isolation. Building improvements must coexist with the need for safe, properly maintained, and financially accessible housing.

Three Reasons a Valuable Solution May Not Be Adopted

Taken together, the discussions suggested three different reasons why a potentially valuable solution may struggle to gain adoption.

First, its value may not be understood.

The benefits may be real, but the people making the decision do not recognize them or do not understand how they apply to their needs.

This is often a communication, positioning, or market-education problem.

Second, the value may be understood but not rewarded by the decision-making system.

A building owner may recognize the long-term benefits of an energy-efficient upgrade, while the initial investment remains difficult to finance.

A developer may recognize the cultural value of preserving a building, while the financial model offers a greater return from demolition and replacement.

The benefits and costs may also fall on different parties.

In building energy efficiency, this is known as the split incentive problem. For example, a landlord may be responsible for financing an improvement while a tenant receives the resulting energy savings.

Such situations cannot always be resolved through better communication. They may require different financing arrangements, incentives, contracts, or regulatory structures.

Third, the solution may simply not be the right choice for that particular situation.

An existing building may be unsafe, prohibitively expensive to adapt, or incapable of meeting the intended use without substantial additional work.

A renovation may genuinely offer less value than new construction when the relevant costs, risks, environmental impacts, and functional requirements are properly assessed.

That is not necessarily a failure of the market or the way value has been communicated.

It may be a question of suitability.

These three possibilities require different responses. Treating every failure of adoption as a marketing problem—or blaming market structures whenever a product is not selected—can lead to equally poor decisions.

HMC Perspective: Understanding What a Market Actually Rewards

This distinction is particularly relevant to companies entering international markets with specialized B2B products.

Consider a hypothetical Japanese manufacturer introducing a high-performance building material or construction system to the United States.

The product may offer a measurable technical or environmental advantage. But that alone does not establish whether it will be adopted.

An architect or engineer may influence the specification. A contractor may evaluate installation methods, availability, and liability. A developer may focus on construction schedules and project economics. A property owner may prioritize maintenance, operating costs, and long-term asset value.

Certification bodies, insurers, lenders, procurement teams, and regulatory authorities may also influence the decision.

For a manufacturer, understanding these relationships is often as important as understanding the potential buyer.

The discussion around Local Law 97 provides a particularly useful example of how market incentives operate.

What a regulation measures helps determine which products receive a direct compliance advantage.

Local Law 97 focuses on operational greenhouse gas emissions.

A building system that reduces energy consumption may help an owner achieve compliance or reduce the cost of meeting emissions limits, depending on the building and the proposed improvement.

A construction material whose principal advantage is lower embodied carbon does not receive the same direct benefit from that particular operational-emissions measure.

But New York City itself illustrates how the relevant criteria can change depending on the buyer.

Under Executive Order 23 of 2022, the city’s capital project agencies are directed to pursue life-cycle assessment measures for qualifying projects, to the extent practicable. The order also addresses environmental product declarations for concrete and structural steel and encourages lower-embodied-carbon construction practices in municipal projects.

The city’s subsequent life-cycle assessment guidance distinguishes between operational carbon, associated with energy used to operate a building, and embodied carbon, associated with materials and construction processes throughout its life cycle.

The contrast is revealing.

Local Law 97 places operational-emissions obligations on covered building owners. Executive Order 23 addresses embodied carbon in applicable city capital projects, including measures intended to improve its assessment and reduction.

A lower-embodied-carbon material may therefore have relevance to a municipal project’s environmental assessment and procurement requirements without receiving a comparable direct advantage under Local Law 97.

That does not mean Executive Order 23 guarantees a purchase preference or requires every public project to select lower-embodied-carbon materials. Its provisions and applicability are more specific.

The broader point is that even within the same city, different rules can influence how a product’s environmental value is considered.

Which buyer a company approaches, and which rules apply to that buyer, can change what counts as value in the purchasing decision.

It would be a mistake for a manufacturer to assume that because a market has strengthened its environmental regulations, every product with sustainability benefits will become more attractive under those regulations.

The company needs to understand exactly what the rules measure, how compliance is assessed, and which participants benefit from the result.

The same principle applies to procurement and commercial decision-making.

A technically superior product may require unfamiliar installation methods. A more durable component may have a higher initial cost, while its long-term savings benefit a different party. An innovative system may require additional testing or documentation before a buyer is prepared to accept the risk.

These examples are hypothetical. They do not establish demand for a particular Japanese product or prove the existence of an unmet opportunity in the U.S. market.

They illustrate why market entry requires an understanding of how purchasing and adoption decisions are actually made.

Before determining how to position a product, several questions deserve attention: Who influences the specification? Who makes the purchasing decision? Who pays the initial cost? Who assumes the implementation risk? Who receives the financial benefit? And what do the relevant regulations and procurement criteria actually reward?

The answers may lead to a different initial customer, an alternative distribution partner, a pilot project, additional technical documentation, or a revised commercialization strategy. They may also reveal that the product is not yet sufficiently suited to the intended market.

In an earlier HMC Insight on Portugal’s fashion manufacturing, the discussion highlighted a gap between industrial innovation and market demand.

Adaptive reuse raises a related but different issue.

Even where a desirable outcome is recognized, the financial or institutional conditions surrounding the decision may favor another approach.

For companies developing international markets, recognizing which of these situations applies is more useful than assuming every problem can be solved through better positioning.

Beyond Architecture

The afternoon at Scandinavia House began with what design and engineering can make possible. It ended with the financial, educational, and regulatory systems that influence whether those possibilities are realized.

Design can make an alternative desirable, and engineering can make it feasible. Whether it becomes a commercially rational choice depends on who pays, who carries the risk, and who benefits.

For companies entering new markets, the useful question is not only how to communicate a product’s value, but whose decisions, costs, and incentives determine whether that value can be realized.

Sources and Further Reading

Event and Program

Architectural Projects

Policy and Research

Related HMC Insights

Editorial note: This article is based on my attendance at Building Less, Transforming More on October 22, 2026, supplemented by official event information, architectural project documentation, and public policy sources. Speaker remarks are paraphrased rather than presented as verbatim quotations. The market-entry analysis represents H. MIYAO CORP.’s independent interpretation of the issues discussed.