Michael Garcia 08/03/18
It is no surprise that there has been a distinct relationship between real estate and neighborhood changes within the last few years.
This phenomenon is called gentrification, which is the process where a neighborhood is renovated so that people who are affluent will want to live in them.
At first glance, gentrification may seem like a positive thing for small businesses. Most people believe that people with higher incomes coming into the neighborhood could result in profit for business, but this is not the case.
When a neighborhood gets upgraded, rental rates for businesses in that area go through the roof. This makes it impossible for small business owners to turn a profit and continue doing business in the neighborhood.
Rent prices have increased 1.2 percent from June to July for NYC as a whole, and is up 1.7 percent in comparison to last year, according to a report by the New York Rent Report.
The data does not show the true effect of rising rent, though. The number of black-owned businesses in NYC, for example, declined from 2007 to 2012 as many gentrifying communities have undergone economic changes. According to a report called The New Geography of Jobs: A Blueprint for Strengthening NYC neighborhoods, in 2007 African Americans owned 13 percent of all businesses in the Bronx and five percent in Queens. In 2012, those figures were down to six percent and three percent, respectively.
Evidently, people are going out of business as a result of gentrification. With that, store owners have no revenue to rely on to live in the area as well. Comptroller Stringer says in a statement, “The increasing rents and economic distress that accompany gentrification are challenges that we as a city must confront.” Without any money to survive, what are store owners supposed to do?
Some businesses being closed are located in East Village and Tribeca. New York’s gentrified neighborhoods has raised rents in these areas to the point where many people from low-income families can no longer gain profit, resulting in homelessness, or forced moving to a new neighborhood. This is not acceptable at all.
The implications of this affect people who don’t own equity or property too. Lack of affordable housing for anyone in a newly gentrified area leads to a loss of diversity in residents and loss of historic structures to the people who once lived there. It isn’t hard to notice that newly introduced amenities in neighborhoods are to benefit the rich, who are mostly people of white backgrounds and hinder the poor, which is stereotypically the minority.
Some examples of this are hypergentrification, where the culmination of bigger, elite companies take the spots of less wealthy ones. This has been seen with companies such as Starbucks and McDonald’s. According to a data report, there are 210 Starbucks in Manhattan, slightly more than six per square mile. In contrast, McDonald’s has 74 stores in Manhattan.
As a result of gentrification, neighborhoods have lost cafés, theaters, shoe stores, toy stores and gift shops. Tribeca, for example as documented in the Tribeca Tribune, “Many Tribeca residents complain that neighborhood-friendly stores seem to be vanishing before our eyes. Small businesses, aren’t just struggling — they are being targeted for assassination.”