LAST WEEK WE PRESENTED PART 2 on How to Preserve a Building. Part 3 of this series focuses on the economic benefits of preservation. If you’re reading this, you likely already know the qualitative benefits of preservation for communities – aesthetic appeal, educational opportunities, sustainability, and revitalization – but there are also proven quantitative benefits, including economic ones. Although Jane Jacobs – the innovative urbanist and activist – made statements that were not initially supported by factual data, many of her observations have since been corroborated since she first made them in the mid-twentieth century. Specifically, in her ground-breaking book The Death and Life of Great American Cities, Jacobs stated regarding old houses: 

“Old ideas can sometimes use new buildings. New ideas must use old buildings.”

Most writers who’ve analyzed her work and this quote agree that her point was that we rely on the past to build the future, and must refine what worked before in order to meet new needs. In another way, this idea also refers to the reality that businesses (especially newly-launching start-ups) or homeowners need older buildings for their often lower price-points and economic benefits, compared to newer (often more expensive) construction. So, the benefits of old buildings for “new ideas” is both conceptual and practical. Read on to learn more about the economic benefits of preservation.

Photo by Brandon Jean on Unsplash

QUANTITATIVE BENEFITS OF PRESERVATION:

The following categories are small a selection of some of the most commonly examined areas of benefit, although many other representative areas of value have been studied and described, including those listed here.

• Real estate value. Historic designation is a ubiquitous component of preservation in cities and neighborhoods, and one of the most common means of preserving multiple dwellings or buildings. However, common negative assumptions about formally-designated historic districts abound; fear of restriction and violation of property owners’ rights – including untenable regulations and decreased property value – are concerns typically voiced by those opposed to preservation and historic designation. While many preservationist and urban experts agree that more rigorous study must continually be done to examine these concerns, valuable information has been gleaned from existing data analyses that reveals the economic benefits of preservation, and some of the findings do contradict these negative assumptions and arguments against preservation/designation. Community historic preservation has been shown to increase real estate value. Place Economics noted that repeated studies over the past 30 years refute the aforementioned arguments against historic designation and preservation in terms of impact on property value.  While they agree it is often true that increased property value equates in increased property taxes (which can be challenging for some homeowners), simultaneously, they found that the “cash flow problem is offset 40 to 67 times by the increased wealth.” Based on a 2012 study in Pennsylvania specifically, an analysis of 3 separate Pennsylvania historic districts revealed significant property value increases. Homes in designated historic districts realized greater value than homes in non-designated areas, had immediate 2% value increases compared to other homes, and appreciated at an annual rate of 1% higher than other homes. This positive effect spread to homes near the designated district, with those prices increasing 1.6% with each mile closer to the district. 

• Local business promotion/New jobs. Place Economics discussed not only how small businesses are a boon to cities, but also focused on the advantages of small and local businesses housed in historic districts and historic buildings. Among those old-building benefits they point to attractive, small spaces, and competitive rent prices. They cite various cities where a large percentage of small or local businesses are located in historic districts. In some cases, those same districts account for a larger percentage of female and minority ownership. Many of these historically-located businesses are start-ups, which in and of themselves typically account for a significant percentage of new job creation in many cities. David J. Brown of the National Trust for Historic Preservation also noted the power of preservation itself for creating new jobs, including those that cannot be outsourced.

• Neighborhood diversity/Affordable housing. While many still assume historically-designated neighborhoods are made up of upper-class, mostly Caucasian people – and while that is still the case in some places –  there are increasing exceptions. Place Economics shared several illustrative cases of diverse historic neighborhoods, in terms of racial, ethnic, and economic heterogeneity. A related point is that this diversity allows for more affordability in some of these districts, another contradiction to the stereotypical view of over-priced historic homes, and are credited with being part of the solution to lack of affordable housing in cities. Donovan Rypkema discusses old buildings and affordable housing in-depth.

• Sustainability. We’ve discussed the sustainability benefits of preservation numerous times over the years, and recently were fortunate to discuss these things more directly during a podcast interview with Amalia Leifeste and Barry Stiefel, authors of Sustainable Heritage: Merging Environmental Conservation and Historic Preservation. Place Economics also cited several pieces of literature on the topic, in addition to Leifeste and Stiefel’s book. A summation of their cited findings indicates that compared to new construction and development (even when new construction uses allegedly “Green” or sustainable new products), historic buildings not only contribute less to pollution, waste, and use of resources including energy, they have saved hundreds of thousands of dollars. 

• Heritage tourism. Place Economics reports that “Consistent findings in both the US and internationally indicate that heritage visitors stay longer, visit more places, and spend more per day than do tourists with no interest in historic resources.” Heritage tourism as an industry contributes significantly to jobs for locals as well as revenue for the local economy, as the services these tourists consume extend beyond the heritage tourism services alone. These other services include local lodging, food and beverages, local transportation, retail purchases, and entertainment. PHMC’s economic report for Pennsylvania also examined heritage tourism, and included a review of 3 sets of locations which collectively accounted for 32 million visitors annually, as of 2011. An estimation of local expenditures from heritage tourism visitors in 2010 indicated visitor spending accounted for $1 billion annually for Pennsylvania, in the previously-mentioned service categories. 

This is by no means an exhaustive guide, but we hope this general overview will give you a sense of some of the most pertinent economic benefits of preservation, historic designation and adaptive reuse. We also hope it will encourage you to explore the topic further on your own. For more in-depth study, you may refer to some of the following resources:

• Place Economics’ summary of statistical analyses Twenty-Four Reasons Historic Preservation is Good for your Community 
• Pennsylvania Historical and Museum Commission’s (PHMC) official report of Economic Benefits of Historic Preservation Activities in Pennsylvania
• National Park Service’s Historic Preservation Economic Impact and their Annual Report on the Economic Impact of the Federal Historic Tax Credit for FY 2018
• If you have some time set aside, you may also want to watch Boston Preservation Alliance’s video on the Economic Benefits of Historic Preservation

Next week: PART 4 OF THIS SERIES focuses on the Substitute Materials.