Historic Preservation: Good for Your Business, Good for Your Community
If this were Thanksgiving time in any other year, you would probably be traveling to join friends and family, or they would be traveling to see you. If this was the first time in town for your visitors (or the first time for you in theirs) late Thursday afternoon, or sometime on Friday, someone is likely to say, “Let’s jump in the car and I’ll give you a tour of our town.” And what would that tour include? I can almost guarantee that nearly every itinerary would include the historic neighborhoods and maybe the historic downtown of the community.
Why is that the case? Because people who are proud of their community want to show off its most special and distinctive parts and in most places that will include historic residential and commercial neighborhoods. That isn’t nostalgia, but rather a conscious recognition that visitors want to see places not exactly like their own, and an often subconscious recognition that the hard to define “sense of place” is usually found in a city’s historic areas.
American towns and cities vary greatly in the emphasis they place on identifying, protecting, and enhancing historic resources. But for those who make historic preservation a priority, there is an economic dividend to the local economy.
The rehabilitation of historic buildings is a labor-intensive activity, so the same amount of money spent on rehabilitation will have a much greater impact on the local economy in numbers of jobs and the income those jobs represent. Every 100 jobs created through new construction will generate an additional 135 jobs elsewhere in the economy. But 100 jobs in rehabilitation will generate an additional 186 jobs, most of them locally. And those jobs have paychecks. $100 in labor income in new construction creates $145 in labor income elsewhere in the economy, but $100 paid to workers on a rehabilitation project will create $174 in labor income elsewhere.
Heritage tourism is a large and growing share of both the domestic and international tourism industry. But heritage visitors have a greater impact on a local economy. They stay longer, spend more per day, and visit more places than the typical tourist. In the State of Rhode Island, for example, the heritage day visitor spends an average of 33% more than the non-heritage tourist, and the overnight heritage visitor spends 48% more than her non-heritage counterpart.
Small and start-up businesses often show a preference for locating in historic commercial areas. In the vibrant city of Nashville, while historic districts only house 3% of all jobs, 11% of job growth, 13% of start-up jobs, and 15% of all small business jobs are found in historic areas.
Both knowledge worker jobs and creative class jobs are disproportionately found in historic districts. That is true in New York City where historic districts host 8.4% of all jobs, but 19.7% of the creative class workers in the arts, entertainment, and recreation professions. But it is not just New York. In Indianapolis, while 16.2% of all jobs are in historic commercial areas, 28.2% of professional, scientific, and technical services jobs are found there. Over the last 15 years, the small town of Cumberland, Maryland, has seen net job losses in both the retail sector and in knowledge worker jobs. But the historic downtown has seen growth in those sectors.
In study after study, the rate of value increase in historic districts outperforms the market as a whole. Savannah, Georgia is one of the great historic cities in America. Over a fifteen-year period that includedthe last real estate recession, everyone of the local historic districts – some quite wealthy, some quite the opposite – saw increases in values greater than the rest of the Savannah market.
In the depths of that real estate crash, foreclosure actions in historic districts were often half that of the rest of the city. It is not that a resident of a historic neighborhood never gets in financial trouble, but the evidence is that even in down markets there is sufficient demand that a property owner can get the property sold before reaching the foreclosure stage.
There is a concept in economics called “revealed preference” – consumers reveal their preference, not by answering a poll, but through their economic decisions. In cities large and small, consumers have revealed their preference for living, shopping, visiting, and locating their businesses in historic neighborhoods. That built history in your community is not nostalgia – it is an economic asset.
To learn more about the studies highlighted in this article, visit PlaceEconomics.