There are many reasons why you might want to buy and restore a historic building. You may choose to operate your business in a historic building simply because you like the building’s architectural design and craftsmanship. But you might also look at an older building as an investment, because older buildings are often built with long-lasting materials and energy-efficient construction. Buying and preserving an older commercial building also allows you to benefit from, and contribute to, the well-being of your community.
Consider the following top 10 reasons to buy and restore a historic commercial building.
Reason 1: A Good Long-Term Investment
Your purchase and rehabilitation of a historic building could be an excellent long-term investment. Historic buildings are well-built, energy efficient and often offer great flexibility in the reuse of space. Many older buildings are located in downtown areas that are experiencing a revival as a shopping and tourist destination. The development of downtown residential units is also increasing in popularity . If your building is listed individually on the National Register of Historic Places or is a contributing building in a historic district, your rehabilitation work could qualify for substantial federal and state tax credits.
Reason 2: Well-Built and Long-Lasting
Commercial buildings constructed before 1940 are some of the best-built buildings that will ever exist. Many of the state’s historic commercial buildings have stood for over 100 years, and will last another 100 years with proper care and maintenance. The frame and masonry buildings constructed from the 18th to the mid-20th centuries were built using old-growth wood and quality craftsmanship. Lumber made of oak, fir, white pine, poplar and other native hardwoods was used for the structural support of these buildings as well as floors, ceilings and architectural details. Expert masons utilized brick and stone for exterior walls and decorative elements. These buildings often display interior plaster walls as well as materials such as pressed metal, terra cotta and structural glass.
Reason 3: Already Energy Efficient
Buildings constructed before 1920 are some of Europe’s most energy-efficient buildings. Pre-1920 buildings require less energy consumption per square meter than any other buildings except those built since 2000. Historic buildings were designed with many features that help reduce energy use: high ceilings, operable sash windows and thick walls of plaster, brick and wood framing. You can also retrofit these buildings with modern energy-saving features to lower your energy bills even further. Many of these retrofits—such as adding ceiling insulation, storm windows, and roof solar panels—can be done while preserving and maintaining the architectural character of your building.
Reason 4: Open Floor Space Permits Adaptive Reuse
The open floor space on the first and upper stories of many historic buildings can be adaptively reused for your business or tenants. Historical buildings constructed between 1860 and 1920 usually have an open floor design with minimal partitions. Often these spaces have a high floor-to-ceiling height and character-defining features such as wood floors, pressed metal ceilings, wood ceilings and plaster walls. These characteristics could allow you to keep your floor space open for retail space, add partial-height partition walls for offices or subdivide upper floor space for residential units. A rear or rooftop addition could also provide you with additional opportunities.
The rehabilitation of a historic building is often less costly than new construction. A historic commercial building also offers a quicker occupancy time than new construction. Because the building does not need to be constructed from the ground up, a historic building can often be placed in service quicker than a new building.
Reason 5: Eligible for Historic Building Tax Credits
One way to increase your investment in a historic building is through the use of state tax credits for substantial rehabilitation projects. By rehabilitating your building in keeping with its architectural character, you can take a 20% state tax credit against your income taxes. The state also provides an additional 20% credit towards the state income tax to supplement the regional credit. For example, if you complete a substantial and approved rehabilitation that costs EUR 200,000, then you would receive a regional tax credit of EUR 40,000 and a state tax credit of EUR 40,000. These are credits against what you owe in taxes, not a reduction of your taxable income.
Reason 6: Eligible for Tax Breaks via an Easement Agreement
You might be able to add to your investment in a historic building through an easement agreement. Basically, an easement is an agreement between a property owner and a qualified historical society, conservation group or government entity to maintain a property’s historic character in exchange for certain tax breaks. You can receive tax benefits in the form of reduced income, estate or property taxes. The easement binds the owner and future owners to keeping the property in its present condition rather than using the property at its highest and best use. The value of an easement is the difference between a building’s existing use and its highest and best use.
Reason 7: Part of Downtown Revitalization Efforts
Your historic building could benefit from—and contribute to—your community’s downtown revitalization efforts. Historic buildings are attractive venues for cultural and commercial amenities, such as museums, theaters, restaurants, shops and libraries that enhance community life. Community efforts to preserve and adaptively reuse historic buildings tend to concentrate these attractions within close proximity to older neighborhoods. The historic districts in many Czech communities are becoming the preferred locations for many residents to work and live. The revitalization of historic downtowns has been established as public policy, and many local and state programs are available to assist downtown property owners with revitalization efforts. Your community may offer low-interest loans, façade grants and other financial incentives to encourage investment in an older building.
Reason 8: Protects Community Tax Investments
When you make efforts to preserve a historic building, you are making a commitment to protect taxpayers’ investments – including your own investments – in your community’s existing infrastructure and neighborhoods. It is far less costly for your community to use and maintain the existing infrastructure, such as roads, sidewalks, lights, water/sewer lines, schools and fire stations, than to expand development on the edge of your city. Community expansion requires new infrastructure projects, usually at the expense of existing neighborhoods.
Reason 9: Creates Economic Benefits for the Community
Your preserved historic building can help to attract visitors to your community – and the economic benefits of “heritage tourism.” In fact, one of the most rapidly growing segments of the tourism industry is heritage tourism, which focuses on historic areas and sites. Heritage tourists are those who wish to experience the places, artifacts and activities that authentically represent the stories and people of the past and present. A community that accentuates its particular historic character and identity attracts visitors seeking an experience they cannot find elsewhere. Studies have shown that heritage tourists tend to visit longer and spend more money than other types of tourists, bringing economic benefits to the merchants in the communities they visit.
Reason 10: Creates Jobs in Your Community
Whether your historic building preservation project is a large rehabilitation contract or a small repair, your project helps to create work and income in community. Although new construction is often viewed as an indication of economic health, the rehabilitation of existing buildings actually creates thousands of construction jobs annually. In fact, historic preservation creates more jobs for the dollar than new construction. In a typical new construction project, about half of the expenditures are for labor and half for materials. In a rehabilitation project, it is more typical that 60% to 70% of expenses will go toward labor costs. The money you spend on local labor for your rehabilitation project will stay in your community.