Historic preservation and multi-family housing have a long history together, especially in the capital stack of affordable housing projects throughout the country. Twinning historic and low income tax credits has been going on for a long time and has produced thousands of units of good quality affordable housing. Certainly the pairing of these two incentives will continue to drive affordable housing production, but continually we are seeing the historic credit help produce other forms of housing as well.
From our vantage point, we have a great view of the projects that benefit from the incentive. For instance, MHA Northeast is currently working on a large student housing project in Worcester, MA, a market-rate project in the heart of Lowell, MA, a high-end multi-family project in Saratoga Springs, NY, and also housing for Millenials in Tulsa, OK.
But beyond utilizing historic credit as a part of financing, these projects share another important feature. They are all in locations that are walkable or in close proximity to transportation.
Despite plunging oil prices, many people are not interested in getting into their cars and driving. They want to be able to walk around the corner or take an Uber to dine, shop, or enjoy local entertainment. And they want to do it somewhere that has a sense of place. There are rare occasions where this can be achieved in a new setting like a lifestyle center, but in most cases it’s returning to cities and town centers where density is not a dirty word, infrastructure is already there (albeit in need of upgrades) and there is plenty of potential stock in the form of historic buildings.
It appears that the American dream has shifted somewhat as couples are waiting longer to have children and empty nesters are moving back into city and town centers. All of this spells a positive future for the multi-family housing market and the reuse of historic buildings.
As this trend moves forward, MHA is seeing more and more conversions of downtown office buildings to mixed-use residential and retail. Many mid-century mid-rise buildings lend themselves to this type of conversion, with the added benefit that density already exists there. Permitting an existing mid-rise conversion is much easier then permitting new construction of the same size. And in smaller market cities there may be additional entitlements like the Housing Development Incentive Program (HDIP) in Massachusetts, which is geared towards the creation of market-rate housing.
“Urban” was not necessarily a dirty word, but it certainly used to conjure up more images of grit and congestion. Now people think of it more as hip or vibrant, and “tired” buildings of the 1950s and 60s are now development opportunities of the new millennium; opportunities that can benefit from state and federal historic tax credits.
This trend towards downtowns and urban living does not appear to be a flash in the pan, and that is a good thing for the multi-family housing market and for historic urban centers around the country. In less than five years, buildings from 1970 will be eligible for historic designation and the term “historic” will include Brutalist buildings. These newly historic buildings, with new green roof or urban farms on top, will likely be the next great places to live.