Tuesday, May 11, 2010

Economist's Notebook: The Value of Architecture and Historic Preservation

From the New York Times: The interior of the old Penn Station, whose destruction has motivated landmark preservationists to protect other historic sites. Photo by Berenice Abbott, 1935, and released by The New York Public Library. Photography Collection, Miriam and Ira D. Wallach Division of Art, Prints and Photographs.

Okay, so I know that I run the great risk of seeming like Ed Glaeser's lackey by constantly commenting on his popular writing, but I can't help it, he is my current favorite economist writing for the 'peeps' (as my son likes to say these days).  His focus in urban economics and agglomeration externalities matches my interests to a tee.  And his latest piece on historic preservation is another topic that I have wondered about a lot myself.  I am a big fan of the Portland Architecture blog, whose author, Brian Libby is a strident preservationist (his latest post is a perfect example).  I am of two minds.  There are times when I can't believe that such wonders as Penn Station (above) are gone forever gone forever and I truly believe in the power of architecture to elevate and inspire.  There are other times, however, when the economist in me thinks about opportunity cost and wonders why we hold on to things like the Memorial Coliseum when its useful life has passed (and when its value as a historic landmark is, in my mind, highly questionable - just because the internationalist style was a popular phase doesn't make it high art).

Glaeser notes the tension between historic preservation and affordability.  Unfortunately the two are often at odds.

While some older buildings are beautiful reminders of another age, too much protection freezes a city in amber. If a successful city doesn’t build, its prices will skyrocket and it can turn into an exclusive, elite enclave.

The great urbanist Jane Jacobs inspires many preservationists. One chapter in her 1961 masterpiece “The Death and Life of Great American Cities” was titled “The Need for Aged Buildings.” Jacobs saw no trade-off between economics and aesthetics. She thought that older buildings were a strategy for providing affordable space.

In her view, older buildings rent for less than new buildings and the city needs cheap buildings, hence the city needs old buildings. That logic leads right to preservation, but it’s a faulty syllogism. In a booming city, restricting urban change makes real estate more — not less — expensive.


Jacobs is right that cities need diversity and innovation. Detroit in 1900 was a model of entrepreneurial activity, with an automotive experimenter seemingly on every street corner. Fifty years later, Detroit had become a highly efficient, but ultimately sterile, industrial monoculture.

Jacobs argues that cheap, old real estate is needed to accommodate new activities. She is underestimating both the construction industry’s ability to deliver cheap, new space in places (see Atlanta), and the venture capital industry’s ability to provide seed financing for new ideas (see Silicon Valley). Still, she is correct that when space is cheaper there are fewer barriers to innovation.

But will preserving old buildings lead to cheaper space?

Jacobs’s focus on the micro-neighborhood, which often leads her to profound insights, here leads her astray. She observes that older buildings are typically cheaper than their new easier-to-maintain counterparts, and that leads her to support old buildings.

Economics forces us to think systemwide. Its most basic principles tell us that when the supply of anything facing positive demand is restricted — be it mangoes or real estate — prices will rise. In a successful city, demand will be robust and some people will be willing to pay high prices for real estate. The only way to keep prices moderate is to supply enough space to satiate demand.

Excessive preservation of older buildings, in a booming metropolis, is a problem precisely because protecting old buildings does exactly the opposite of what Jacobs thought it would.

When historic preservation stops higher-density development, it doesn’t maintain affordability; it creates scarcity. In Jacobs’s day, Greenwich Village townhouses were affordable. Today, after more than 40 years of historic preservation, thanks to the Greenwich Village Historic District that she supported, those homes can cost more than $10 million.


The inevitable result of the rising prices that come from restricted supply is that districts have become increasingly exclusive. In 2000, the average household in a historic district was 74 percent richer and 20 percent more likely to be white than households elsewhere in Manhattan south of 96th street.

Preserving beautiful, important buildings surely has great value, but Jacobs was wrong to suggest that there is anything like a free lunch. When preservation restricts new supply, the city becomes more expensive and less open to new people and new activities. The right level of preservation must balance the desire for historic beauty with the desire for affordability and inclusiveness.

I think even ardent preservationists like Brian Libby would not argue that a balance has to be struck, but it is difficult to know where that balance lies. To me the Memorial Coliseum is a no-brainer: it is a relic of a different time and have outlived its usefulness and it is exceedingly difficult to find a real purpose for the builiding as it stands. The land is very useful for other purposes potentially, it occupies a beautiful rise on the river with a view of downtown and is extremely well connected to mass transit.  To those attached to its aesthetic, it should be preserved despite its uselessness.  It is this attitude where I think I draw the line - there are many buildings that can be re-purposed or simply refurbished and can remain quite useful and then it is worth thinking about the opportunity cost of doing so versus the cost of replacing it.  And yes, this includes the environmental impact as well which is another conundrum, newer is more efficient but it often means more initial resources.  But my attitude is also due to my own opinion about the value of the architecture itself.  I am willing to admit that this may be a minority opinion, but in this case I think the very vocal group that fought to save it are the distinct minority.

But I also think the idea that preservation is inherently elitist is also a bit to simplistic.  Do only the elite benefit from beauty in the built environment?  I don't think anyone of any background can wander the streets of Paris and not feel some movement of the spirit upward.  There are no easy answers to the value of this feeling to society, so I think it is best to tread lightly when we discard beautiful relics of the past.


ben said...

While I'm hardly an advocate for demolishing standing structures for the sake of corporate interests. It does seem to me that eventually all of these designs outlive their useful life. And that inevitably they will crumble, even if that time is far, far in the future. As such perhaps we should keep in mind that a bridge is a bridge, artistic it may be, but designed to transport cars, bikes, and people around an obstacle. No matter how pretty it may be, its a question of its viability.

Oliver said...

In the 1950s, Meier & Frank bought the Portland Hotel and tore it down to build a parking lot. Then a couple decades later, the city tore down the parking lot and installed Pioneer Square. I think the loss of the Hotel Portland, which was both aesthetically beautiful and historically significant, was tragic. But would the loss of Pioneer Square be any less tragic? Hard to say.

Capital Taps said...

I'm glad you stressed the ambiguity and ambivalence around old buildings - I'm not sure hard-n-fast rules are useful in either direction.

At the same time, too often old buildings are razed for urban monoculture - surface parking lots or "city beautiful" urban renewal. The loss of buildings for parking lots is an especially debilitating form of urban osteoporosis. (Equally, inflexible preservationists would sometimes ossify neighborhoods and create a different kind of death.)

My own interest, in researching local beer history, I mourn the loss of breweries and saloons. The tin can beer era of industrial lager was not an improvement. It may have been more "efficient" but you have written helpfully on the ways values get externalized (as well as beeronomics!).

If only Memorial Coliseum's neighborhood hadn't already been f-ed up with at least a couple of rounds of only partially successful urban renewal. Then its utility might be more obvious - or at least enduring. Unfortunately it's in a dead zone of too much parking lot (on off-nights the Rose Garden is just a big parking lot, too).

Thanks for the note!

Brian Libby said...

With all due respect, it's not true that Memorial Coliseum has outlived its usefulness. In 2009 it hosted over 150 events, even more than the newer Rose Quarter next door. Obviously it can't compete directly with the Rose Garden, but that's why the Coliseum is being remodeled into a slightly smaller arena (about 7,000 seats), which perfectly fits a market niche. There is no other similarly sized arena in the city. What's more, Portland offers the only two-arena combination in America, which is what helped attract popular events like Davis Cup tennis and the Dew Sports tour.

Then you have the fact that Memorial Coliseum is a one-of-a-kind work of architecture: the only arena in the world with a 360 degree view. It's a diamond in the rough because of disrepair, but undoubtedly a diamond.

If saving this kind of busy, beautiful, historically important building is wrong, I don't want to be right!

Patrick Emerson said...

Hi Brian,

Thanks for commenting. I am still not sure about the coliseum, but I will say that in the time since I wrote the entry I have attended and even where JE Isaacs of the Blazers talked about their vision for the Coliseum and all of the programming that still happens at the venue.

Someone, it seems, should do the present discounted value calculation that factors in the cost of restoring the Coliseum and the revenue from future programming against the opportunity cost, the value of the next best alternative. It is likely, given the amount of stuff that still happens in the Coliseum, that this will (even without factoring in the historical value) show that keeping the Coliseum is still a winning proposition. But I don't really know.

Patrick Emerson said...

Ooops, hit publish too soon...

So I have come a long way toward the preservation side, but I would still like to see an accounting of how future revenues could fund a refurbishment of the arena.

Also I assume you like the Blazers vision for renovating? It looked pretty great to me - if you are going to keep the building, it seems folly to remove the seating bowl.