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.