The Issue
As communities feel the ebb and flow of economic highs and lows, they often face similar outcomes when it comes to commercial resiliency. For communities that have struggled and are now booming, revitalization and redevelopment may come with both advantages and disadvantages. They bring in highly sought-after investments to stimulate local economies but at what price?
Rising real estate prices and changing demographics associated with redevelopment can alter affordability and associated local markets when a small business’s clientele relocates to another more affordable location.
The resultant changing local demographic, termed gentrification, has a domino effect on small commercial enterprises who historically provided affordable products and services to those living in the nearby neighborhoods. Gentrification results in the replacement of establishments catering to a more affluent clientele.
These new businesses may include chains, big box retailers, boutiques, and commercial office spaces who are capitalized and can afford higher rents.
The push for mixed-use, higher density, and clustering can push out the smaller, less land-use efficient businesses; essentially the community creates victims of its own success.
Similarly, communities that have struggled to stimulate their economies may see an entry of discount chain stores and fast-food restaurants. These new enterprises undermine the unique qualities of neighborhoods and undercut local small businesses leading to those small businesses being forced to close their doors or relocate.
Whichever the cause, new investments may alter the community character by pushing out legacy and cultural businesses. These businesses relate to their communities in ways which chain stores and restaurants may not. Small businesses are critical to the regional economy, accounting for almost 95% of regional businesses and employing almost 42% of the region’s workforce.
They represent a community’s history and ethnicity or local culture. When the legacy or cultural businesses are displaced from their current location – either following their original customer base, being priced out of the market, or their locations are slated for redevelopment with no accommodation for their businesses to remain, the essence and identity of the neighborhood may change as well.
These changes in either land-use or market entry of corporate chains often happen quickly with little communication with existing businesses. When properties are redeveloped, the local businesses may not be able to find suitable alternative sites, work with employees on new locations or find new staff. Further, many small businesses are not included in revitalization conversations as they individually lack the capital or political influence to engender change.