The Problem

On this page:
What is Gentrification?
The Negative Effect of Gentrification on Local Business
Problem Definition
Assumptions
Theory of Change

First things first: What is Gentrification?

You might be hearing more and more about the word “gentrification,” but still aren’t quite sure what it means. It’s a complicated topic with lots of potential connotations, but for our purposes, we define it as the following:

Gentrification is the process by which the essential character of a neighborhood is changed as higher income households displace lower income residents.

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So how does this happen? When the government invests its public dollars in a particular community, it becomes a more desirable location for both businesses and residents. One example from our community here in the Seattle are the areas targeted for transit-oriented development in South Seattle (the neighborhoods like Othello and Rainier Beach along the Link Light Rail).

Sometimes gentrification can be positive – it can increase the amount of housing available and improve public spaces. But the flip-side is that it can also result in the displacement of local and culturally appropriate community businesses – usually because community investments lead to increased land values which can lead to higher rents and a higher cost of doing businesses.

The Negative Effect of Gentrification on Local Business
There are two possible negative effects that gentrification can have on businesses:

  1. Displacement. The higher rents caused by higher land values may be more than local and culturally appropriate businesses can afford, inadvertently forcing them to move out of the community.
  2. Determent. New small businesses that might benefit local residents may not be able to move to the community in the future because of the high cost of operating there.

Healthy communities have local businesses that meet the needs of the people in the neighborhoods they serve. Therefore, we see these possible negative effects as a threat to the overall health, vibrancy, and strength of communities that are affected by gentrification. Also, not all communities are affected the same, and areas where rents and land values have yet to go up have the opportunity to take steps to ensure their local business culture can stay intact for years to come.

Case in Point: Seattle’s Rainier Valley

The “Retail Development Strategy for Rainier Valley,” a document prepared for the City of Seattle, reported that businesses in the area saw rents increase as much as 50% after Link Light Rail development, with some businesses spending 20-30% of their revenue on renting their spaces.

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Link Light Rail at Othello Station
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Storefronts in Columbia City in the Rainier Valley

So What’s the Problem?

In order to both describe the negative effects of gentrification on businesses and lay a foundation for any possible solutions, we decided upon an overall definition of the problem:

Unchecked gentrification will lead to the involuntary displacement of small businesses that are critically important to a community. It will also prevent new businesses that would be culturally relevant and beneficial for the community from opening in the future. These outcomes will damage the community by harming its cultural and social identity, making jobs harder to find, weakening the economy, and making the community less stable as a whole.

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Assumptions
In the course of writing our problem definition and coming up with our proposed solutions, we had to make a few assumptions that we would like to state clearly:

  • Gentrification makes property values go up.
  • Higher property values can result in landlords charging higher rents, or in selling their property in order to get a profit off their building.
  • Many small and independent businesses rent commercial space (their place of business) rather than owning it.
  • Many local, culturally important businesses with strong ties to their communities cannot afford significant and rapid rent increases.
  • High rents for commercial spaces make it more difficult for new, small, independent businesses to open.
  • Having businesses that are locally owned and culturally appropriate in a community have positive effects that have nothing to do with economic measures.
  • As locally owned, culturally appropriate businesses are replaced by new establishments selling higher-priced goods and services, the overall cost of living for that neighborhood goes up. This cost of living increase may result in residents themselves having to leave the neighborhood.
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Yasuko’s Teriyaki on Broadway – the owners told the Seattle Globalist that high rents due to development were part of their difficulty.

Our Theory of Change: What Can Be Done and When
Understanding the negative effects gentrification can have on a community, we are left with the question: What can be done about it?

Our solution:

Permanently Affordable Commercial Space

If affordable spaces in a community are reserved for the same small, local businesses that we have been talking about, that would shield neighborhoods facing gentrification from some of the negative effects discussed earlier. The rest of this website describes how these types of spaces can be acquired, but there’s one more important thing to note before we get into the specifics. In order for this solution to work, the affordable commercial spaces need to be in place by the time property values are increasing (see figure 1). This means that communities who want to reserve permanently affordable commercial spaces need to take action while land is still relatively inexpensive, and the potential for buying commercial space is high. In other words, this intervention is best for communities that have not yet experienced the full negative effects of gentrification.

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