Economic Benefits of Preservation
Costs of Rehabilitation vs.
New Construction
Rehabilitation can seem an expensive option for a commercial developer, for there are drawbacks to rehabbing older structures--spaces not easily adapted to current needs, problems of deterioration not apparent at the beginning of work, difficulty in finding apporopriate construction materials. Yet rehab can also pay. Studies have shown that rehab can save money compared to new construction, as shown in the following report.
Rehabilitation costs per square foot are often significantly less than the costs of new construction. Case studies presented at the National Trust for Historic Preservation conference on the "Economic Benefits of Preserving Old Buildings" demonstrated that the cost of rehabilitating old structures generally runs 25-33 percent less than comparable new construction. In those cases where the costs are equivalent, the preservation project provided greater amenities--time saved in construction, more space in either height or volume, or the right location. These amenities frequently produced other economic benefits to a developer through higher occupancy rates and rents. In addition, rehabilitation oftentimes bypasses lengthy development review processes, local neighborhood opposition, and zoning delays.1
The costs of rehabilitation can be seen in other ways as well. A government study found that rehabilitation construction uses 23 percent less energy than new construction, the primary reason being that the work is more labor intensive than material intensive, depleting fewer natural resources.2A report on the "Conservation of the Urban Environment" prepared by the Office of Archaeology and Historic Preservation in the Department of the Interior explained this in more detail. The reliance on labor intensive work "...is important not only in terms of the employment potential of historic preservation, but also in terms of an individual project's multiplier impact on a local economy. Dependant on the size and sophistication of a locality, a higher proportion of construction materials will come from outside the area than will construction labor. For funds that are spent in a local economy, a higher percentage of funds remains as a stimulant in that locality from projects that are labor intensive.
Thus, funds utilized in historic preservation projects have greater impact on employment than funds used in the construction of new buildings such as hospitals, schools, and office buildings because of (1) the greater labor intensity of preservation projects, and (2) through this labor intensity the higher multiplier."3
Testimony by the General Service Administration indicated that rehabilitation creates two to five times as many jobs as new construction for a given expenditure of money, and that this was especially important since older buildings tend to be found in areas of the city that have the highest rates of unemployment and underemployment.4
1 Thomas D. Bever. 1983. "Economic Benefits of Historic Preservation." Readings in Historic Preservation: Why? What? How? edited by Norman Williams, Jr., Edmund H. Kellogg, and Frank B. Gilbert. New Brunswick, N.J.: Center for Urban Policy Research. p. 38.
2 Ibid. p. 81.
3 Ibid. p. 79.
4 Ibid. p. 80.
