An illustration from Boston of the Jane Jacobs point that successful cities have "the need for aged buildings"

Death and Life of Great American Cities by Jane Jacobs is a foundational text for understanding from the ground up those qualities that support urban social and economic life.

The point about "the need for aged buildings" isn't that Jacobs was a historic preservationist, although that was one of her interests.

It has to do with the fact that "aged buildings" -- remember she was writing in the days before it was common to keep refinancing buildings, back then they paid them off -- were paid off and with fewer bells and whistles and "old" so they were much cheaper to rent by comparison to new buildings.

As she wrote:

If a city area has only new buildings, the enterprises that can exist there are automatically limited to those that can support the high costs of new construction. ... enterprises that support the cost of new construction must be capable of paying relatively high overhead ... To support such high overheads, the enterprises must be either (a.) high profit or (b) well-subsidized.   ...

Perhaps more significant, hundreds of ordinary enterprises, necessary to the safety and public life of streets and neighborhoods, and appreciated for their convenience and personal quality, can make out successfully in old buildings, but are inexorably slain by the hgh overhead of new construction.

As for really new ideas of any kind--no matter how ultiately profitable or otherwise successful some of them might prove to be--there is no leeway for such chancy trial, erroa and experimentation in the high-overhead economy of new construction. Old ideas can sometimes use new buildings.  New ideas must use old buildings.

Again, she was writing in a time when venture capital didn't exist in the same way or with astounding amounts of money as today, so there are plenty of examples of new ventures going into new/expensive buildings. (p. 187-188)

There is an article in the Boston Globe, "Sustaining startups in a no-frills building (manual elevator included," about Kendall Square in Cambridge, Massachusetts.  The business district is a hotbed of biotechnology and information technology firms and plenty of startups and other firms attracted to proximity to MIT and Harvard, and the other companies already there.

This has pushed rents very high, which can be sustainable in the face of lots of venture capital sloshing around seeking extranormal home runs.


The Kingston Building (right) is attracting firms being pushed out of Kendall Square by high rents.  Photo: Suzanne Kreiter, Boston Globe.

But even so there are "aged buildings" still around, with rents one-half of the $60+ in the newer buildings, providing access to the "agglomeration economies" of the district for those start ups and firms that are not venture funded.

From the Globe:

In Kendall, you can rent a swell office for $60 and up per square foot; on Kingston Street, when startups began migrating across the Charles, some found space for less than $15 per square foot, though today’s prices are closer to $30.

Buildings like the Kingston Building “really sustain the startup scene,” says Matt Bellows, chief executive of Yesware, a Boston company that creates software for salespeople. “It’s got a great location, nice open space, windows on three sides, and it’s cheap.” After spending two years in the building, Bellows says, “we only moved out when we got over 50 people, and the lines for the two tiny bathrooms became too long.”

Although while the building's owner is happy with the way things are, as land values rise and the building and site's "intensification value" continues to rise concomitantly, the building could be lost in favor of a new and larger building, with much higher rents, and a loss of support for early stage business development.

Interestingly, while economists like Edward Glaeser deride historic preservation protections as a hindrance to economic development and growth, the reality is that in strong markets, the buildings preserved as a result of preservation protections enable economic development, at its earliest stages when it is seemingly invisible and overshadowed by bigger businesses that seem more successful in large part because they are at later stages in their growth cycle.

Rather than being a hindrance, historic preservation protections -- the Kingston Building is not protected by the way -- support the maintenance of a more diverse business economy by ensuring access to low cost and well located office space, which start ups need especially at their earliest stages when higher cost space is too expensive and funds for investment in the business are at a premium.

However, this is complicated by today's real estate practices, which tend to keep buildings encumbered with mortgages, therefore rents are higher than when Jane Jacobs was writing.

Furthermore, I do recognize that in the highest demand real estate markets, all buildings end up being highly valued, and rent differentials between old and new buildings end up narrowing significantly.

The problem with Glaeser's thinking about preservation is that he is considering only the nation's strongest property markets (Boston, San Francisco, New York, Washington), and preservation does reduce the capacity for land use intensification, which is his focus (Preserving History or Hindering Growth? The Heterogeneous Effects of Historic Districts on Local Housing Markets in New York City, NBER).

In most of the other markets, preservation provides all the benefits that Jane Jacobs wrote about for businesses, as well as for residents seeking ways to stabilize otherwise declining communities (e.g., "This building is not empty, it's full of opportunities," Laredo News).