ECONOMICS UNIQUENESS

HERITAGE CONSERVATION AND PROPERTY VALUES ■ 131
both because the acquisition price will likely be lower and also the complication
of having to deal with existing tenants is lessened. 6 It is important to
note that proximity to an empty or abandoned building has one of the greatest
adverse impacts on the value of other properties. So when a formerly vacant
building is rehabilitated and put back into use, there will oft en be a value
enhancement of nearby buildings.
• More adaptive reuse projects. Apart from general cycles of decline, one of the
major reasons why heritage buildings too oft en sit vacant is that they have, or
are perceived to have, lost their utility—known in real estate terms as functional
obsolescence. Perhaps the use for which the building was constructed
no longer exists, or the use is met in a decidedly diff erent physical confi guration.
Buildings can also suff er from functional obsolescence due to antiquated
or ineffi cient building installation systems—heating, plumbing, electricity,
and so on—or from a spatial confi guration that is seen as unsuitable for corporate
and private users. Functional obsolescence is one of the most common
justifi cations for the demolition of a heritage building. Adaptive reuse is the
reinsertion of a new utility into an existing building.
• Expanding tax revenues. With reinvestment, in-migration of middle-class
families and stable businesses, reduction of vacancy, and increases in property
values, there comes a corresponding increase in local tax revenues. In fact, it
is not uncommon that the biggest economic benefi ciary of a heritage-based
regeneration program will be the local government.
• Creation of new jobs. As people and businesses move back into a neighborhood,
almost automatically new jobs are created. Th ose households will bring
with them disposable income that will be used to purchase goods and services.
Th e new businesses will need to hire employees. Building renovation is
a labor-intensive activity, so a wide range of workers (from common laborers
to skilled craft smen) will be needed to rehabilitate the heritage buildings.
• Property appreciation. As will be seen in the research cited below, one of the
most consistent patterns of heritage-based regeneration programs and historic
designation of neighborhoods is that property values will not only go up, but
will likely go up at rates greater than in the market as a whole.
It may be stating the obvious, but rents and values have to go up if private
capital will be attracted on a sustained basis to a targeted area. Without increasing
rents and values there will not be suffi cient fi nancial resources to pay for adequate
maintenance, let alone the major capital investment that heritage buildings oft en
require. Th e exception to this is if the public sector gives deep and ongoing subsidies
to the private sector. While some governments are willing to provide signifi
cant subsidies as a catalyst investment in the early stages of a revitalization
eff ort, few governments today are either willing or able to provide subsidies on a
permanent basis.