Gentrification: Small Business Survival

Gentrification: Small Business Survival

Ever since gentrification has existed, there have been constant struggles between existing and the new residents, who bring with them cultures, preferences, lifestyles, and spending habits which greatly alter the scene they are now a part of. Simply put, the mere presence of a certain group in an area changes the statistics of the area, and it means that new businesses are going to want to cater to the new demographic. As such, the local economy is turned upside down so quickly that small business owners are often unable to adjust their business models to adapt.

One of the biggest fears of gentrification is the replacement of local businesses with retail franchises that lack local character. The story is as old as gentrification itself. As a neighborhood becomes desirable, demand for housing and retail space outpaces supply and the prices go up. Some residents quickly discover they can no longer pay their rent, or if they are homeowners, are unable to pay the newly increased property taxes. Local business owners face the same plights but are met with the additional challenges of adjusting to a rapidly changing market.

The International Association for the Study of Popular Music, an unlikely source of insight into the topic of gentrification, recently published an article titled Rock Clubs and Gentrification in New York City: The Case of the Bowery Presents. These days, Brooklyn looks very different than it did in the early 90s. The journal article by Fabian Holt, an associate professor at Danish University of Roskilde, takes a look at how music promoters The Bowery Presents were able to stay relevant as Brooklyn changed around them.

Holt credits this largely to The Bowers Presents’ ability to grow as an organization along with the rising costs of the neighborhood. Bigger bands were needed to fill bigger rents. Holt was able to determine three time periods in the gentrification process and notes how the promoters adapted to the changing climate.

1993 – 1997: The small club grows new talent in the emerging gentrification of the Lower East Side. The Bowery Presents started on the Lower East Side in 1993 when gentrification was already happening (Abu-Lughod 1995), although not yet in the contemporary condition of generalized gentrification. The small club (Mercury Lounge) could evolve alongside other small clubs among a thriving scene of young artists and audiences. By working strategically with a large number of new bands, the company invested and developed its profile and reputation.
1997 – 2004: The mid-size club promotes talent to a broader audience within the context of accelerating gentrification. The opening of The Bowery Ballroom allowed the company to promote some of the artists to a larger audience while touring headliner artists attracted a broader audience and more audiences from outside the neighborhood. This helped accelerate gentrification of the area and was a catalyst for a growing musical culture among the new urban middle-classes in both programming and venue design.

1997 – 2004: The mid-size club promotes talent to a broader audience within the context of accelerating gentrification. The next moment of structural significance was the opening of more mid-size venues (Webster Hall in 2004 and Music Hall of Williamsburg in 2007) and large club venues (Terminal 5 and United Palace, both in 2007). With a system of venues from the small club to the mid-size venues and up, The Bowery Presents created a more extended internal career orbit for artists and gained a degree of monopoly status. At this stage, professional business management became a more important part of the company’s activity, compared with the mid-1990s when most of the activity happened with young bands in Mercury Lounge.

11 years of growth as a company helped to keep The Bowery Presents going strong. It was smart about expanding its venues and shows to accommodate all tastes, new and old. And, most importantly, find ways to keep the lights on.

The Bowery Presents was fortunate, however, to be able to overcome two very profound obstacles due to the nature of their business.

First, it was able to grow the shows it put on while still staying true to its base. For most businesses facing gentrification threats, this is not an easy thing to do. New renovations or locations to improve the visual image in order to please the newcomers don’t always sit well with the customer base that has supported the business for a long time. It’s easy for the customer to feel extremely slighted, as the message often comes off as offensive. Essentially saying “your business isn’t important to me anymore”.



It’s easy to conclude that this is simply the nature of the industry. After all, music promoters can simply book acts which appeal to different audiences, either on different nights or as openers. Other clubs and promoters were not so lucky. After struggling to make ends meet and keeping things together by a thread, Holt also references this letter sent by the owners of Tonic night club in Brooklyn to illustrate that when operating costs increase, not everyone is able (or willing) to change to stay competitive.

The clear message is that it’s difficult to please everyone if you decide to expand your business.

Secondly, The Bowery Presents was able to keep its customer base even after the traditional residents of its neighborhood were displaced. Higher costs of living pushed out a lot of the people who would hang out at the Mercury Lounge. Even though they now lived in a different neighborhood, they still came back to hang out often. Most brick and mortar businesses would not be able to do this. Our day to day habits show that in the interest of time, convenience, and supporting local business, we prefer to do business close to where we live. To go out of our way, a product or service needs to be something very unique and special. And of course, it can’t be substituted by one of the new businesses moving in.

Those are the concerns for the existing proprietors, but what about the future ones? While bigger businesses are able to quickly sign on to expensive leases, someone looking to establish a new business is going to have a much harder time securing startup capital. That’s assuming there will even be enough new businesses to keep pace with the demands of a changing economy. In the US, more and more college graduates are stating that crippling student debt is stopping them from being able to start a new business. New competition keeps industry, and our lives, moving forward. It’s how we innovate. By making it harder to innovate, a global competitive edge is lost.

Not all businesses have the Bowery’s resources, ability, or will to adapt with a changing neighborhood; especially newer businesses trying to make it in an already gentrified area. Not all new businesses will be able to put together a business plan that can adapt as quickly as the market around them changes. If a problem such as this is going to be such a struggle for small business veterans, the newcomers are likely to be at even more of a loss. This is why it is so important for planners and policy makers provide resources to nurture small business that work with the market. Small business incubators and shared work stations like the one Array Creative is opening in Akron, Ohio are essential in order to ensure that startups have a place to start up. Many people will prefer to work with smaller organizations, giving people the ability to grow their businesses even when so many startup costs are becoming increasingly out of reach. It also means fewer restrictions on building uses to foster small business growth. The form based codes and mixed use development strategies such as those found in the State of Oregon’s Commercial and Mixed-Use Development Code Handbook can help aide business by changing the rules in which entrepreneurs operate. You don’t need to grant subsidies, result to crony capitalism,  or levy higher taxes on residents (although TIF districts may be a good idea in some cases to allow the well adapting small businesses to aide the struggling ones) in order to change those rules for the better; you simply need good policy and good people implementing it.

Cultures will continue to change with the daily altering of gentrification, but in order for culture and business to advance we must allow them to adapt as quickly as possible to the changing world around them. Not all of them will be able to. Others will choose not to, deciding instead that it is no longer worth the social cost of doing business. Many will have a chance to become something new, to lead new trends and become success stories others can learn from. Gentrification is going to continue to consume neighborhoods, even if you can protest your way out of a new Trader Joe’s opening up in your neighborhood. It’s a phenomenon that changes the very way we interact as people, causing many to go through feelings of guilt or anger, and one that alters our own unique individuality, and market competition.

To keep our places unique, we must allow them to hold on to their uniqueness, adapt quickly to change, and be able to make sure that the next version of a neighborhood has a stronger community and better sense of place than the last one; regardless of who moves in or out.


Editor-In-Chief at The Urbanist Dispatch  John Cruz, MUP, is an urbanist, photographer, and city planner. He has lived in Detroit, Montréal, and now resides in St. Louis.

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