What Advantages Do Adaptive Industrial Heritage Reuse Processes Provide? An Econometric Model for Estimating the Impact on the Surrounding Residential Housing Market

Abstract

When industrial relics, such as obsolete buildings, sites, and infrastructures, enter into a process of adaptive reuse, they become transformation engines capable of shaping the urban fabric. They provide tangible and intangible links to our past and have the potential to play a significant role in today’s cities’ futures. One unresolved issue is the quantification of the externalities of these transformation processes. If undertaken correctly, adaptive reuse can contribute to the development of social and cultural capital, environmental sustainability, urban regeneration, and, most importantly, economic benefits to the surrounding community. In this sense, understanding the value of heritage is particularly important in light of the new European urban environmental policy movement based on the circular economy, which aims to change the way Member States consume and produce materials and energy. After a review of the externalities generated by the adaptive reuse of disused industrial heritage, the paper will concentrate on the estimation of economic benefits given by a transformation process that affected Turin’s Aurora district (Northern Italy) during the last years. The hedonic pricing method (HPM) was used to investigate the effects of the construction of new headquarters and the redevelopment of an old power plant converted into a museum and conference center. This study used econometric models to identify a significant increase in market prices within 800 m of the site and calculated a EUR 16,650,445 capitalized benefit from the transformation on the surrounding residential building stock. The study thus contributed to the awareness that reused heritage not only improves the lives of residents, but it also has a positive impact on the real estate market, in terms of transactions, as well as market values.