Gentrification Is Big Business

Sesamestreet

It’s easy to forget as we fret about rising housing prices that gentrification is not merely the process by which certain neighborhoods phase into fashion, nudging aside poorer residents so as to accommodate richer ones, and making even middle-class denizens of Brooklyn wonder whether they ought to overpay to live in Queens.

It is also a very lucrative investment for some deep-pocketed players.

Consider, for example, Crown Heights, whose motto could be, “I am large; I contain multitudes.” The sprawling Brooklyn neighborhood became famous in the public imagination for the fury that broke out between Hasidic Jewish and African-American communities not too long ago and about which the brilliant playwright/performer Anna Deavere Smith created Fires in the Mirror.

Now it’s being featured in the Times Real Estate Section.

Initially ambivalent about Crown Heights, Ms. Washington said that with the decrease in crime and growth in conveniences like banks, she now has no plans to leave. However, she is worried that the area’s rapidly inflating home values are pushing out some of her neighbors, including many black and lower-income residents.

“I want great people to move on the block — people who are going to take care of their properties and be neighborly — so I don’t care what race or income they are, but I do worry what this means for the diversity of the neighborhood,” she said. …

What You’ll Pay

The price of new residential development has increased in Crown Heights more than in any neighborhood in the borough except Downtown Brooklyn, according to data from MNS Real Impact Real Estate. From the first quarter of 2013 to the first quarter of this year, it rose by almost 45 percent to $880 a square foot.

Prices for homes in the neighborhood have increased by roughly 14 percent since last year, according to sales information provided by real estate agents.

This transformation did not happen by accident. According to Quartz, the powers that be, which include Goldman Sachs, decided to target Crown Heights for reinvention, and they intend to profit mightily from their work. Some people flips houses; Goldman flips neighborhoods.

Goldman has said it’s looking to make “catalytic” investments in up and coming neighborhoods. In a May 2015 document, it identified 1000 Dean as a project that can target small businesses and creative professionals, and “act as an anchor for future development and investment in Crown Heights.” It invested more than $26 million in equity and debt in the project, according to figures Goldman provided to Quartz. And it has gone on to invest in other Crown Heights property: A building that houses a church community space and housing for formerly homeless veterans on Utica Avenue in Crown Heights.

The revitalization of Crown Heights is paying off. While it suffered worse than Brooklyn as a whole during the recession, it has staged a healthy recovery, overtaking the borough in median residential sales prices during the fourth quarter of last year.

Last year Starbucks opened a store on Franklin Avenue, a sign of property value growth to come, according to a Zillow analysis that showed surrounding home values rise after a Starbucks enters a neighborhood.

“[Developers] are trying to find a coffeehouse, a sandwich shop, enough different variety of retail establishments that it creates a key center of gravity for that community,” Zillow chief economist Stan Humphries tells Quartz. “The entry of a coffee shop into a location provides a signaling function to other types of investors…that this neighborhood has now arrived and is now open for business in a way that it was not before.”

A Starbucks is not merely a Starbucks. It is a canary in a coal mine.

Can gentrification ever be fought, even by the more privileged residents of a community? Signs point to no, as this NPR piece about a neighborhood’s attempt to save one beloved small business makes clear:

The fate of the family business was threatened recently by a hike in the monthly rent — from $4,000 to $10,000. Itayim could not afford it, and he prepared to close after more than 25 years in business.

When customers and neighbors asked about the bare shelves at Jesse’s Deli, they found out it was closing by July 31.

A neighbor started a petition and sent 1,200 signatures in support of Itayim to the landlord, Karina Bilger. Bilger returned it unopened, with a note saying there would be no renewal on the lease, and declaring all past offers rescinded. …

The creative class even got, well, creative:

The community showed support for Jesse’s by making mock posters that advertise prices increased two and a half times and “gentrified” products. They called the campaign an “Artisanal Rent Price Hike Sale,” and displayed the bright posters inside the store and in the front window. A social media campaign used the hashtag #jessespricedout on Twitter, Instagram, and Facebook.

Organizers also appealed to Mayor Bill de Blasio and local Councilman Stephen Levin to support Jesse’s and other small businesses by getting behind the Small Business Jobs Survival Act. The measure would require, among other things, a minimum 10 year lease.

No dice. As long as it’s legal and lucrative for landlords to jack up the rent 2.5x in one go, many of them will.

Cities like Portland, OR, are doing their best to at least slow the process.

It remains to be seen, though, if the good intentions and flowery language being added to the comp plan will result in meaningful change, or if it’s too late to avert widespread gentrification.

Nearly half of Portlanders are tenants. Many live in fear their monthly rent will jump $300, forcing them to move on 30 days’ notice, says Justin Buri, executive director of Community Alliance of Tenants, which is part of the ad hoc coalition.

In past eras, low-income tenants and people of color were most subject to being pushed out by higher rents. “For the first time in our history,” Buri says, “it’s starting to have an impact on higher-income white renters as well.”

The coalition’s strategies include a displacement impact analysis before the city undertakes major projects, provisions to ease or prevent such impacts, and proposals to add more affordable housing.

“There’s not a silver bullet to (avert) gentrification,” says André Baugh, chairman of the Planning and Sustainability Commission. “All of these things combined can make an impact.”

In other words, now that white people are inconvenienced, government will see what it can do.

The Washington Post reminds us, though, not the situation is not as cut and dried as it seems:

The more useful question isn’t whether “gentrification” is good or bad, but what it might look like to have new investment in a community that benefits existing and future residents alike. I know people who worry this isn’t possible — that new investment and old residents cannot coexist, that the former can only displace the latter. But I’m convinced there must be a way to do this. And figuring that out is one of the great challenges facing cities like Washington today.

The word “gentrification” is also a distraction for another reason. A tremendously small number of places nationwide have actually undergone this kind of change. The much larger and more problematic force in the housing market isn’t gentrification; it’s segregation. It’s not that some middle-class whites have moved in among poorer minority neighbors; it’s that many middle- and upper-income whites would not.

Interesting point. Surely though we can focus energy — on a personal and a civic level — on both problems at once?

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