The economic impact of embracing adaptive reuse in buildings

single-meta-cal May 22, 2017

Pizzelle’s (pictured above) and Mr. Jim Hudson, the mastermind behind Lowe Mill, were honored last week with the Mayor’s #ThisPlaceMattersHsv award. Lowe Mill is the perfect example of wildly successful adaptive reuse and its economic benefits.

There is a nobility in historic preservation, in being the visionary or pioneer to bring new life to an old building. There is nobility in the potential of widespread benefit to one’s community.

But nobility doesn’t pay the contractors’ bills.

The business of preservation, especially in the popular realm of adaptive reuse – utilizing an old building for a totally different purpose than its original role – is a risk-reward venture.

To ease that risk, there are two other words on either side of a hyphen: public-private.

That’s an “incentivized investment,” says Cheryl Morgan, Emerita Professor of Architecture at Auburn University, who recently spoke at a seminar and roundtable discussion at Campus No. 805.

“Where you have public and private money together is important,” she says.

We’ve seen with the economic shift where people are investing and spending on experiences and not things. The areas with historic character have been the places that have had the most momentum the soonest.”

Though Morgan says “it’s very hard to sometimes put real numbers on things,” the developer naturally stands to benefit. But so can others within the orbit. With preservation, and particularly with designation as a historic place, property values naturally increase.

The property tax increase remains manageable for owners yet the collective increase in revenue for a city can be impactful, justifying a public partnership.

It could be the visionary is taking the first bold step, “dropping a pebble in a pond and watching the ripples,” as Dennis Madsen, Manager of Urban and Long Range Planning for the City of Huntsville says.

That adds security for those who might piggyback on a development.

“The thing that we see in Birmingham, when you have a historic district with a designation, in many cases it gives people confidence to invest because they (know) the next-door-neighbor building is not going to be torn down tomorrow. They’re investing because of the character in place.”

There is a recent economic trend that has aided the preservation effort.

“We’ve seen with the economic shift where people are investing and spending on experiences and not things,” Morgan says. “The areas with historic character have been the places that have had the most momentum the soonest.”

Savannah, Ga., has a deeper history than almost any city in the United States and much of its economy is built upon that history and the tourist dollars it earns. Recently, it wanted to take an introspective look at historic preservation, and how it benefitted the city simply beyond tourism.

Some of the findings by the Historic Savannah Foundation:

— Using the federal historic tax credit has meant an average of 169 jobs and $7.5 million in labor income each year over the last 15 years

— Historic districts are a particular attraction for jobs in the arts and culture and other knowledge industries and small firms and start-up firms disproportionately choose to locate in historic neighborhoods

— Property values in Savannah’s historic districts have outperformed the city as a whole

— Savannah’s historic districts have been a magnet for investment, with $3.8 billion spent between 2007 and 2013

A parallel can be drawn between Savannah and Huntsville. Through the Historic Huntsville Foundation, preservation has been a front-burner issue since 1974. But there has been dramatic growth in recent years, particularly in adaptive reuse and in the city’s efforts to lure and keep a millennial workforce.

As Chad Emerson, CEO of Downtown Huntsville, Inc., noted, the recent international conference of travel writers and bloggers hosted by Huntsville held events at Lowe Mill, Campus No. 805 and the A.M. Booth Lumberyard.

“Can you imagine telling somebody seven years ago we’d be going to those places?” Emerson says.

As Morgan tied a bow onto her presentation, she did so with an appropriate slogan: “What we build, where we build and how we build shows what we value.”

Sometimes it’s about our values – but the economic value can’t be ignored either.