Nashville, Tennessee, is laden with history, and locals appreciate preserving historic structures whenever possible. Across the city, there are numerous converted landmark buildings in use as businesses and for multi-family housing. With so much interest in Nashville commercial real estate, many investors are looking into restoring historic buildings for commercial purposes.
When adequately executed within the guidelines of Nashville historic preservation, restoring old buildings can be a far more beneficial path than taking on a ground-up construction project.
It is pivotal to determine whether this scenario is a good fit for the projected plans and uses for the building. Keep reading to learn the pros and cons of commercial historic redevelopment in Nashville.
What Constitutes Commercial Redevelopment?
Commercial redevelopment encompasses the restoration or renovation of an existing structure. Redevelopment is defined as any new additions to a site that has pre-existing uses. These buildings may or not be historical, and their intended uses after redevelopment may differ entirely from their initial or previous purposes.
The building is essentially redesigned into something entirely new or is carefully restored to its former state to retain its historical value. There is another version of commercial and historical redevelopment known as the adaptive reuse variation. These are older structures that are converted to meet current market uses through improvements.
The Advantages of Restoring and Redeveloping Historical Commercial Property
Opting to redevelop the right existing property during the correct timeframe has numerous benefits. These types of projects have played a vital role in revitalizing the city's economy here in Nashville, especially in the downtown district. Depending on the work being done, there are often savings initially, such as time and money spent getting permits and dealing with contractors. We'll go into a few perks more in-depth below.
Historical Renovations Can Boost Property Value Appreciation
Historic commercial properties have an increased chance of rising in value as assets. However, the value of these efforts can increase the value of surrounding properties, as well. They also tend to be in demand, especially with those who appreciate historical structures.
Participation in Downtown Revitalization Efforts
It is becoming more commonplace for downtown districts to prioritize rejuvenating their commercial buildings, many of which are the oldest in the city. More public policies in communities exist towards such projects, and there are often various incentives like low-interest loans and grants that encourage investing in historic preservation. Historical renovations are attractive places to open up commercial and cultural amenities, including:
Any installation that enhances a community's sense of engagement and enjoyment of local businesses could utilize the property.
Having passed the test of time, buildings constructed before 1940 have proven their structural integrity. Some historical properties have stood for a century or longer and may last another 100 years with proper upkeep.
This is due to the use of old-growth hardwoods and expert masonry materials that are resilient. Stone and brick exteriors with plaster walls, terra cotta, pressed metals, and structural glass were installed using some of the highest quality craftsmanship.
Historic Buildings Can Be Energy-Efficient
The majority of historical commercial properties can be energy-efficient by design. A study of energy efficiency in historic buildings shows that they offer the best in the realm of energy efficiency per square foot compared to most properties constructed before 2000. Energy consumption is often reduced by sash windows, high ceilings, and thick walls.
Investors can also retrofit historic buildings with the best green upgrades for home sellers to further reduce energy use. Insulation, solar power, smart systems, and other improvements are possible without disrupting the original architectural features of the property. Technical Preservation Services offers a free guide on improving the energy efficiency of historic commercial properties.
Restoration Reduces Environmental Repercussions
The environment and community will be impacted much less by sidestepping a ground-up construction project and restoring an older building. Reducing land disturbance and using fewer resources is good for the planet. By removing any existing lead-based paint and asbestos products while avoiding the need for new resources, the environment in and around the structure is healthier overall. At the community level, benefits such as reducing crime and vagrant occupancies may result if the building had been unoccupied or abandoned.
Restoration Creates Jobs
Along with a new renovation project come jobs in the construction sector and the potential for hiring new staff to work in the building. Contractors, designers, engineers, landscapers, office workers, and others will benefit, which is excellent for the local economy and families in the community.
Taking Advantage of Historic Building Tax Credits
There are quite a few tax perks and grants that can accompany these investments. There are federal tax incentives that allow up to a 20 percent credit against any tax bills each year. There is no state tax in Tennessee, but specific state financial benefits are available for those taking on a commercial building revamp project.
Potential Challenges of Commercial Restorations
Depending on their year of construction, many historical buildings did not have to follow any specific city codes or require permitting and zoning licenses. While current owners may have met these, some make improvements without doing so. There are also cases where additions have been made without updating the architectural plans.
Non-permitted work discovered during the renovation can be costly to fix, especially if it involves additions or if the structure has materials now known to pose health risks or other dangers. There are also chances that this will delay the project while the issues are being resolved.
Historic Redevelopment Is an Option in Nashville Commercial Real Estate
Many trends show that commercial real estate is the right investment in Nashville, and there are many exciting avenues to explore within the commercial real estate world. Taking on the challenges of redeveloping and restoring a historical commercial property should be done with caution. By doing adequate research, you can understand both the potential pros and cons of such investments.
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