July 11, 2008

With Gentrification, Small Businesses Take the Hit

by Kate Perkins, Community Blogger.

A whole new look for MLK?

With much of the buzz surrounding the New Communities Initiative focusing on issues of affordable housing and demolished housing projects, little attention (at least here) has been paid to the effects of the New Communities Initiative on the surrounding economies such as consumer and retail markets.

While it is debatable whether New Communities counts as an instance of gentrification, looking at cases of "neighborhood improvement" in other cities can serve as an example for what DC could expect to happen with advent of four formerly housing-project areas replaced by mixed income housing alongside affordable housing.

Examples from cities across the US, from Portland to New York and Atlanta cite how brand retail development followed housing development in city neighborhoods. As the property values of housing increases, so do the property taxes. For local businesses, this also means increases in rental costs. Considering the appeal of a new market, chain retailers will offer above-market rent for choice spots and drive up rental costs at alarming rates. Landlords choose to not renew leases of existing businesses to attract more national brands. Furthermore, banks often lend at better terms to big-name tenants, eventually forcing many local businesses out of the changing neighborhoods.

Although some (technically slated as 1/3) of the housing in the New Communities Initiative will be affordable (and first priority placed on former housing project resident), much of the housing will be fair market rate. Alongside the units at fair market rate come consumers with disposable income to spend in the area surrounding their new residence. What will the effect be on current local businesses surrounding New Communities neighborhoods?

In order to investigate the potential effects of the New Communities Initiative on surrounding local economics, we traveled to Southeast DC, the Anacostia neighborhood which surrounds the Barry Farm housing project slated for redevelopment as part of the New Communities Initiative. We walked the streets and entered local businesses to ask workers and residents their opinions on the coming development in the neighborhood. Currently the area surrounding Barry Farm is either without commercial investment or includes a mix of mini-marts, liquor stores, barber shops, store front churches, and carry-out dining. There are no chain retail establishments in the immediate area.

With as much buzz and concern surrounding the New Communities Initiative in the advocacy community, most consumers and workers around Martin Luther King avenue in Anacostia appeared largely unaware and unconcerned about the coming New Communities Initiative. None knew the name of the initiative, a few had heard of the plan to bulldoze Barry Farm housing project.

Most people we spoke with didn't believe much could be done to change the neighborhood, development or not. A man who'd been visiting the neighborhood for 30 years summed it up, "this is a lower income area, always has been, always will be….same way 25, 30 years." Many said any new businesses coming in would need to take extra precautions and security measures. One woman told the story of a car dealer who'd come into town years ago who couldn't keep his inventory safe from theft. She said someone would need to have "a lot of love for the community" to invest in business here because of all the potential dangers involved. One young man said he didn't think the violence in the area would change even if many residents of the housing project were moved out or surrounded by middle-income neighbors.

Similarly, most of the local business owners we spoke with appeared unconcerned about the coming development. One man working in one of many local convenience stores said with development in the area they'd see "lots of places get torn down around here but it doesn't really effect who comes in here [the store]—so we don't really care." The owner of that same store didn't recognize the name "Barry Farm" when I asked him about the redevelopment just blocks away from his store. A few business people in the area actually stated that coming development would probably increase their profits and consumer base.

However, looking at examples from other cities, this may not be the case. This is not just the story of "giant Walmart kills the local mom and pop store" but also a story of how development in inner-city neighborhoods often pushes out local convenience stores and ethnic-specific retailers to make room for national chains. Exemplified in the example of Chicago's downtown revival, as higher-income tenants move into a neighborhood, the demographics of the neighborhood both in buying patterns and racial identity change. In areas such as Anacostia, where much of the local business is tied to local ethnic identity such as ethnic specific barber shops, beauty parlors, and music stores, other cities have seen development drive-out these local ethnic-specific establishments in favor of name-brands with a wider appeal. In the case of Anacostia, if the area were to become more racially diverse, many local retailers would lose their primary market.

Rental costs are an issue owners are currently facing. Some local business owners we spoke with expressed concerns about rising rent costs, saying that if costs went up they were in danger of being "pushed out" out of business. Considering the possibility of future development left these store owners looking worried.

Overall, most people had a difficult time imagining a drastic change in the community any time soon, development or not.

1 comment:

DG-rad said...

wow -- awesome post. definitely a worthwhile topic, and it will surely be interesting to see how the retal environment (or general lack thereof) is affected with all these new developments.