Does Adaptive Reuse Pay? A Study of the Business of Building Renovation in Ontario, Canada

Abstract Older buildings are important aesthetic, cultural and economic resources but in many jurisdictions hundreds of historic buildings have been demolished because developers and bankers argued that the cost of adapting them for new uses is too high. Still, a growing number of reputable developers are completing exciting projects featuring innovative building renovation. However, when particular development projects are presented to decision makers, generally only the developer/lender’s cost analyses are presented and, therefore, they are unable to make truly informed judgments. This study examines the business of heritage development, which consists of building renovation or adaptive reuse, in order to determine the characteristics of success. In Ontario, Canada, there exists a group of dynamic and creative investors with a passion for older buildings. Some reuse projects are more costly than new building but not all and the return on investment for heritage development is almost always higher. This has important implications in Ontario where recent legislative changes have finally given local councils the authority to prevent the demolition of listed buildings, but the lessons for other jurisdictions are also important. Keywords: HeritageHistoric BuildingsEconomicsAdaptive ReuseConservationOntario Notes 1 Shipley and Reyburn, ‘Lost Heritage’. 2 Blackburn, ‘What Developers Think of Historic Preservation’. 3 Kincaid, Adapting Buildings for Changing Uses. 4 Walljes and Ball, ‘Exploring the Realities of the Sustainable City through the Use and Reuse of Vacant Industrial Buildings’. 5 Bunting, ‘Housing Strategies for Downtown Revitalization in Mid‐size Cities’. 6 Ontario Government, Places to Grow Act (Bill 136) (2005), available from http: //www. pir. gov. on. ca/userfiles/HTML/cma₄₄0890₁. html2005. These new policies are based on a range of research which concludes that more intensive, compact development of cities makes economic sense: CMHC, Conventional and Alternative Development Patterns—Phases 1 and 2; De Sousa, ‘Measuring the Public Costs and Benefits of Brownfield versus Greenfield Development in the Greater Toronto Area’; Persky and Wiewel, Brownfields, Greenfields. 7 Mason, ‘Economics and Historic Preservation’, i. Some specific examples of work on evaluating the economics of heritage development can be found in: National Trust for Historic Preservation, Appraising Historic Properties; Rypkema, The Economics of Historic Preservation. ; Rypkema and Wiehagen, Dollars and Sense of Historic Preservation; Wood, The Economics of Rehabilitation. 8 New construction cost estimates were provided by Mark Ravelle, a Quantity Surveyor working in St. Catharines, Ontario, and are estimates for the whole province. 9 The London Free Press (31 June 2004). 10 Loft units are open‐concept flats or apartments and are a style typically created in reused, older buildings. 11 Barber, ‘Municipal Tax Incentives in Victoria, British Columbia’; National Trust for Historic Preservation, http: //www. preservationbooks. org/; Mason, ‘Economics and Historic Preservation’. 12 The Ontario Planning Act, the Municipal Act and the Development Charges Act all provide for incentives including the Heritage Property Tax Rebates. 13 De Sousa, ‘Contaminated Sites’. 14 Shipley and Reyburn, ‘Lost Heritage’. Additional informationNotes on contributorsRobert Shipley Robert Shipley, Steve Utz & Michael Parsons, University of Waterloo.