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Hotels increasingly using historic properties for redevelopment

In cities like St. Paul and Minneapolis, you often drive or walk by buildings that have seen better times. But in the details of their design and construction, you will notice features that if you wanted in a modern building would cost a fortune. Iconic structures like the Landmark Center have design elements and finish that would be unlikely to be reproduced in a "modern" structure.

To some degree, it reflects the lower labor costs of skilled trades from that era and also part of the "city beautiful" movement that created much of the classically-inspired public buildings and institutional structures that marked the latter half of the 19th century.

The neglect of many of these structures over the last fifty or more years has meant they can represent bargains on the commercial real estate market, presuming one has some idea of a valuable reuse for the building.

One developer has come up with a novel strategy, by taking these often-elegant buildings and transforming them from previously-varied uses, like farm implement showrooms or Federal Reserve banks, into boutique hotels.

The boutique hotel business relies on the unique and iconic and by developing these older structures, they are able to differentiate themselves from the ordinary chain hotel. This type of redevelopment may even provide additional benefits to the developer.

If they meet National Park Service standards, they can qualify for tax credits and many states offer additional tax benefits for rehabilitation of historic buildings. Of course, there may be additional legal or regulatory requirements, including those involving environmental concerns, so being well advised on these issues is essential for any project.

Source:, "Developers are turning Rust Belt hulks into luxury hotels," Patrick Clark, Bloomberg April 28, 2016

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