CHICAGO—Experts believe that construction costs will continue to climb in 2016 as labor and many materials become more expensive. The squeeze should push many developers and owners to forgo ground-up development, and instead to adapt and reuse existing commercial buildings. This will be especially true for affordable housing projects, many of which already have tight budgets with little room to spare. But experienced builders also say this strategy can provide a lot of benefits.

"The quality of construction for buildings put up in the 1920s and 1930s was, in many cases, superior to anything you will find today," David Block, director of development for VeriGreen Residential Development, tells GlobeSt.com. "There was a sense of craftsmanship that is difficult and expensive to duplicate today."

VeriGreen, an affiliate of Evergreen Real Estate Services, is currently converting the former St. Charles Hospital in Aurora, IL, into mixed-income senior housing, and has found that rehabilitation has other advantages. The Art Deco structure was added to the National Register of Historic Places in 2010, and as a cherished landmark, the plan to preserve it garnered a good deal of community support. "There is almost always a built-in support group in every community for their historic buildings," says Block.