Report Release: Small Business Anti-Displacement Strategies & Tools: Supporting Local Small Businesses In Crenshaw
By Inclusive Action - Prince Osemwengie, Lyric Kelkar, Rudy Espinoza; Destination Crenshaw - Jason Foster, Tafarai Bayne, Terrick Gutierrez, Nadra Nittle.
A few months ago, we wrote about the forthcoming report: Small Business Anti-Displacement Strategies & Tools: Supporting Local Small Businesses In Crenshaw. Today, we’re so excited to finally be able to share it with you. Below you will find a summary of a few of the key data points we found throughout our research, and some important recommendations we made as a result (you can find the full report here).
Our report finds that the commercial real estate market forces, especially in “transitioning” or gentrifying neighborhoods like Crenshaw, are compounding the displacement of local small businesses. Many factors play a part in these detrimental community changes, such as rapidly increasing commercial rent and property prices, limited commercial real estate financing options, and inadequate commercial tenant protections to name a few. For local small business owners in a community plagued by a long history of systematic racism, community-controlled commercial real estate and public policy interventions are vital to curbing these negative repercussions.
This report identifies and analyzes the barriers impacting local small businesses and nonprofits from acquiring commercial property, the challenges business owners face as commercial tenants, and the limitations of existing commercial real estate financial products.
Here are a few of the important statistics we found in our research:
The commercial asking rent price per square foot (psf) rose 26% from 2020 to March 2021, despite Los Angeles County having one of the nation’s strictest COVID lockdown restrictions in place.
In Crenshaw’s 90043 zip code, private entities (i.e. property owners or management companies) account for 85% of property purchases from 2011 - 2021.
Over 63% of local small business owners surveyed cited rising rent as their main concern. Additionally, 91% of surveyed local business owners have considered purchasing commercial space for their business. The primary rationale for wanting to purchase property is increased stability - mitigating being priced out or forced out due to a landlord wanting to sell the property.
Conventional commercial real estate financial loans are not designed to support local controlled real estate models.
Local small business owners are at a significant disadvantage in terms of speed (e.g. locating a property and closing on the deal) and generating the capital needed to acquire commercial property in hot real estate markets.
The report concludes with robust public policy and program recommendations that local governments can implement to curb small business displacement, expand access to community-controlled real estate, and strengthen small business commercial tenant protections.
Here are a few of those recommendations:
Technical assistance for small businesses and nonprofits seeking to acquire commercial property.
A city and county commercial community land trust pilot program to support locally controlled real estate ownership.
Legal aid clinics to support local small business owners negotiate lease terms.
Commercial rent subsidy program to provide temporary assistance to local small business owners who have experienced a significant increase in rent or provide capital (i.e. security deposit, first/last month’s rent) to new business owners seeking to sign their first lease.
A gap financing soft loan product (a loan without interest, or with interest below the market rate) to help small business owners cover the loan to value gap arising from high property costs.
A guaranteed loan program for commercial real estate acquisition for community-oriented non-profits.
Property values and asking commercial rent prices are rapidly rising, and small businesses in Crenshaw are financially being stretched thinner and thinner .
We have the opportunity to make a change. We must build out support systems for small businesses who have weathered insurmountable challenges and give these pillars of our communities the resources they deserve.