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Cutting Costs Downtown

Another positive aspect of locating downtown is potential cost savings. Along with the myriad programs that federal, state and local governments offer for downtown and distressed urban areas (like business improvement districts, empowerment zones, enterprise zones, tax increment financing, et. al.), renovating older buildings can also provide lower construction costs. According to Hal Miksch, president of the urban planning consultant firm Main Street Connections (www.mainstconnections.com), there is a section of the national building code, called the alternative building code, that if used properly can cut costs dramatically.

The alternative building code maintains that historic buildings have inherent safety features that the modern building code doesn't take into consideration, and the alternative code awards points for those features. "It is possible to earn enough points with these built-in features or with minor modifications to the structure that you don't have to do certain things that modern code would say you do, like add a second staircase," says Miksch. With enough emergency lights and exit signs, a company could avoid adding a second staircase, "so there's a lot of difference in cost between those two options," he adds.

Miksch cited a major regional bank that owned a historic, nine-story, downtown building as a good example of how this code can cut costs. The bank had 50 employees working on the upper floors of the building and around 150 working in a suburban complex. The local fire marshal inspected the downtown building and required that safety improvements be made. After deciding that it couldn't recapture the costs of renovating the building, the bank opted to move those 50 employees out to the suburbs. Later, the bank learned that under the alternative building code, those changes weren't necessary. "So instead of having to spend $250,000 to move 50 employees out," Miksch explains, "they spent $90,000 and moved 150 in."

Using the same code, Holiday Inn saved money on its first re-adaptive use hotel, a downtown Cleveland project. "Their cost per room was around $65,000," says Miksch. "A comparable quality-level hotel was built just down the street, brand new, and it cost $95,000 per room. So the economics of locating in these older structures and re-doing them can make downtown very appealing."