When Local Businesses Wilt in the Heat


Booming real estate values is a problem many cities wish they had. But ask any local leader experiencing a boom and they will tell you: it brings on whole new problems.

The most commonly known one is that housing becomes unaffordable. As real estate values rise, rents go up and it becomes harder for older people to remain in their homes, for young people to live on their own, and for low-income families to live close to their work.

What’s less commonly discussed is that commercial space becomes unaffordable too. Cities that are paying attention might work to address housing affordability, but very few cities are working to address the commercial affordability problems of a real estate boom.

As commercial rents go up, independent businesses get forced out. These are the shops, cafes, restaurants, and small businesses that helped make the area desirable in the first place. They are often the first to come in to an unproven market, and are connected to the local community in ways newcomers cannot be.

Losing these businesses means you are losing a piece of what makes your community unique — and that’s a business problem. If the neighborhood only has high-cost retail space, the only businesses likely to be able to afford the space will be national chains, which nearly always lack the authenticity, charm, and connections to the community that independent businesses have. It also means the neighborhood is losing good-paying jobs.

One example of this at work is in San Francisco. The city’s sky-high real estate costs are putting so much pressure on beloved neighborhood businesses that the City established a Legacy Business Program, which recognizes that “San Francisco wouldn’t be San Francisco without its many independent, locally-owned businesses.” In 2015, the City brought forward a ballot measure to create a Legacy Business Historic Preservation Fund — the first legislation in the nation to recognize “notable small businesses as historic assets and incentivize their preservation.”

There’s no magic formula to make independent businesses stay in the face of rising rents. However, municipalities can create a mix of commercial real estate that can give local businesses the options they need when it comes time to change.

You might not think a real estate boom will ever be your challenge, but I want you to plan for wild success.

Recast City helps build communities where small-scale manufacturing businesses thrive. Are you ready to thrive? Book a free 45-minutes call with me now to learn more about how your community could protect small-scale manufacturing and other local businesses from displacement even in the face of hot new development.