Small businesses in Charlotte feel the sting of gentrification
Less than a decade ago, Lockwood community advocate Chris Dennis was fighting the stigma that his North Tryon Street neighborhood was among the country’s most dangerous.
Now, as executive director of the nonprofit Community Dream Builders, he’s fighting to keep residents in their homes as investment floods into the area just north of uptown. Last month, he became one of the displaced.
But instead of being forced out by residential gentrification, it was his business that had to leave.
There’s been an influx of development in neighborhoods close to uptown, thanks to the light rail and young professionals’ desire to live close to the city center. The new development drives up the cost of living, sparking an outcry over the displacement of long-term residents. But local businesses, oftentimes minority-owned, are also being pushed out.
It’s an issue that’s often overlooked for small businesses, a vital part of the local economy. The city and Charlotte’s largest business group don’t track the trend, either.
Small, established businesses like Dennis’s that are in desirable neighborhoods are “at the chopping block when new development comes in,” Charlotte City Councilman Justin Harlow said.
Dennis was one of around 120 tenants in the former City North Business Center, where he paid around $750 a month for a 450-square-foot corner of the second floor. He’s also a former Bank of America operations manager who was described as the “Ambassador of Lockwood” in a 2014 Observer story.
In February, he received a letter from the new property manager giving him a little over 60 days to vacate. The building’s new owners are redeveloping the site.
“Owning your own business, building your own business has been the key to the American dream,” said local historian Tom Hanchett. “We need places like Central Avenue or Brooklyn of yore ... for people who want to change the world and make a little money while doing it.”
‘Prime’ for development
Dennis learned about his neighborhood from a homeless man called “Carwash.”
After Dennis moved to the community around 15 years ago, the man approached him with a bucket of water, offering to wash his truck. As Dennis got to know him, he began to understand the circumstances that shaped his neighbors.
“He said, ‘because of family, financial and social disconnects I became homeless,’ ” Dennis said.
In 2010, a study from the website Neighborhood Scout ranked several neighborhoods along North Tryon Street, including Lockwood, as 11th of the 25 most crime-ridden areas in the country. Dennis and local police disputed the findings. Dennis noted that the area, which had a median income of less than $30,000, was working to stabilize itself.
Now Dennis worries about the investments flooding into his neighborhood.
Dennis’s space at the business center housed his nonprofit as well as his business, e-Fix Housing Solutions, which buys dilapidated properties to fix up and turn over to renters or new owners at an affordable cost.
“When I moved in, it wasn’t prime” for development, he said. “So the challenge is — it’s ‘prime,’ but what does that really mean? And is that a good thing for me?”
A corporation affiliated with Texas-based Artesia Real Estate purchased the building where Dennis is for $8.8 million last year, property records show. Over the next year, Artesia plans to refurbish the building, which will include around 125,000 square feet of office space and retail.
It’s Artesia’s first project in Charlotte. Colin Brothers, a founding principal with Artesia, said the development will be an economic boost for the community.
“I don’t want ... us to be perceived at all as an out-of-state group that wants to come in and do a project and quickly leave and exit it,” Brothers said. “We want to be invested in the community long term.”
The Tryon Street redevelopment is part of an ongoing trend in Charlotte: Small businesses are pushed out of areas as new development comes in, bringing with it new restaurants and retail chains, according to tenants and community leaders.
In Plaza Midwood, Vizionz Barber Shop, a black-owned establishment, closed last year. In its place, a trendy Vietnamese restaurant called Cilantro Noodle opens soon.
Nearby in Villa Heights, a small white building that includes Lulu’s Seafood shop is being redeveloped for new retail, including likely a brewery and creative office space. LPA Urban, which bought the property for $1.39 million this year, plans to begin construction this year.
Lulu’s Seafood owner Luu Ngo said she’s not sure where she’ll take her business, which sells and fries seafood in-house.
“We don’t know what to do now,” Ngo said.
This isn’t the first time she has moved her business. Ngo, who came to the U.S. from Vietnam in 1986, used to operate Overseas Market on South Boulevard. The building was sold and torn down several years ago, replaced by Sam’s Xpress Car Wash.
Mark Miller of LPA Urban said tenants have the option to stay, but that rents will be “considerably higher” than they are now. Ngo currently pays $2,250 a month for her roughly 2,200-square-foot space, which is up from the $1,800 the previous owners charged.
Miller said his firm likes the Villa Heights neighborhood. “We felt like the demographics (of people moving into the area) were pushing our interest in that corridor,” he said.
In a 2014 study from Harvard and UC Berkeley, Charlotte ranked last out of 50 cities for economic mobility. Since then, local leaders formed an Opportunity Task Force and spent millions of dollars on initiatives for issues like affordable housing and job creation.
But little attention has been devoted to the role that business ownership plays in economic mobility.
“Ownership, true ownership — whether that’s a house or a business can boost any of that mobility,” said Dr. Shanté Williams, chairwoman of the Charlotte Black Chamber of Commerce. She called much of what’s been done to address upward mobility “short-term patches.”
Hanchett, the historian, said areas like North Tryon Street and Central Avenue were places where mom-and-pop businesses could get a foothold on the economic ladder. And there are many success stories of Charlotteans who were able to do that.
At age 22 and with $6,000 to his name, Leon Levine started Family Dollar in 1959 in a low-cost space in Plaza Midwood. That same kind of spot is hard to come by now, Hanchett said, as rents soar. “It would be hard to imagine something like (Family Dollar) starting today anywhere. You certainly couldn’t start it at SouthPark mall.”
When it comes to economic mobility, the benefits of small businesses extend beyond individual business owners. But that’s starting to shift as national chains start to replace local businesses in changing neighborhoods.
When areas gentrify, “small businesses that are locally-owned move out and chains move in,” said Jason Richardson, director of research for the National Community Reinvestment Coalition. The Washington, D.C.-based group advocates for opportunities for people to build wealth.
Most of the money large chains make go to corporations based in other locations, Richardson said.
Frances Hall is executive director of the Beatties Ford Road Vocational Trade Center, which provides training for trades like construction. It’s near Washington Heights in west Charlotte, which had a median household income of just under $26,000 in 2017, compared to around $61,700 for Mecklenburg County.
“Small businesses ... provide employment opportunities,” she said. “So if we are thriving then we can promote economic development in our community. But if we’re struggling we can’t hire.”
Even for businesses that own their own building, the recent county revaluation means many could face higher property tax bills.
But small businesses on a tight budget are less likely to have the extra money to pay rising property taxes or rent increases. Data show the increases may affect black-owned businesses disproportionately.
On average, revenue and other income sources for black-owned businesses total $60,000 a year, compared to nearly $500,000 for white-owned businesses, according to a 2017 study conducted by BBC Research and Consulting for the city of Charlotte.
Nowhere to go
There are few affordable options left for displaced businesses. The annual average rent in the first quarter of the year for office space in Charlotte was $29 per square foot, according to real estate services firm JLL.
Zandra Smith, who rented space near Dennis in the North Tryon business center for her medical equipment company, learned she had to move when a letter was slipped under her door in February.
Smith managed to rent two spaces in the center for $1,000 a month. The location was perfect for her — convenient to several highways, across the street from the Amtrak station and she could easily get to clients in senior centers and hospitals.
“The rent was affordable for the space,” she said. “Now I look just around the corner from where I moved five years ago and it’s five times the amount of rent.”
Smith wanted to go to an area like NoDa or Plaza Midwood. But the rents for around 1,200 square feet were at least near $4,000 a month. Instead, she moved farther north, off of Mallard Creek and Prosperity Church roads, to find anything affordable.
Tenants in the North Tryon building weren’t informed about the plans for the redevelopment, Smith said, and weren’t offered space in the new building.
“I feel like they acquired a piece of property and they really just didn’t care about the people who were in the building,” she said. “These are lives that are being affected.”
Brothers, who is redeveloping the North Tryon business center, said tenants were given more than a 60-day notice to move out — double the amount of time required by their leases. And they offered tenants services from two brokers to help them find new space.
He said the former tenants are welcome to return, but because the office space being offered will be larger, it likely won’t make sense for their needs. He said they’re still working out what they’ll charge for rents.
‘We missed the ball’
Commercial displacement in Charlotte is neither tracked nor quantified. The city also does not track data on the displacement of minority-owned businesses. The Charlotte Regional Business Alliance doesn’t either.
Demographic data show how neighborhoods close to uptown have changed as new investment floods in, though.
Highlighting an influx of development, NoDa had 10.2 commercial permits per 100 acres in fiscal year 2018, up from 4.8 in 2011, according to the most recent data from the Charlotte/Mecklenburg Quality of Life Explorer. It’s a collaboration between the UNC Charlotte Urban Institute, Mecklenburg County and the city of Charlotte.
That same area was roughly half black in 2016, down from nearly 69% in 2000. As a sign of decreased poverty in the area, about 17% of the NoDa population relied on food stamps in 2016, down from 24% in 2011.
Richardson, who has studied gentrification with the National Community Reinvestment Coalition, said there’s a lack of data on business displacement nationally.
“Businesses are kind of the anchors of any community — the corner store, the restaurants,” he said. “When they change it can have a significant impact on the rest of the community.”
After protests erupted when a CMPD officer shot and killed a black man named Keith Lamont Scott, the city promised the community it’d help create jobs, training and opportunities in low-income neighborhoods. Supporting small businesses is an important part of that promise, advocates say.
Charlotte needs to do more to assist small businesses displaced by new development, said Harlow, a city council Democrat whose district includes several close-in west side neighborhoods such as Wesley Heights. He said he hadn’t considered the problem much until he began to see news stories in March about City North Business Center.
“We put so much focus on the residential component of gentrification that we often forget about the job and business impacts,” Harlow said. “We missed the ball a little bit on the business side.”
Supporting small businesses is a key part of creating economic opportunity, advocates say.
In recent months, Charlotte has worked to address affordable housing. The city, for instance, has $50 million in bond money for the Housing Trust Fund, which subsidizes affordable housing projects.
Charlotte has engaged the private sector to help address housing needs too. Several banks have pledged tens of millions to help address affordable housing.
And the city has started acquiring apartment complexes and pledging funds to renovate them to preserve “naturally occurring affordable housing.”
The city could consider these methods when looking at business gentrification, Harlow said. But addressing all of the small business community’s needs is challenging, he said. “We have a lot of priorities with limited resources.”
Survive and grow
Dennis, the community advocate, is moving his business and nonprofit to a nearby property he owns. He knows that not all the other business center’s former tenants will be so lucky.
“You hear about people moving but you never hear about them coming back,” he said.
Businesses pushed out by development need the tools to be able to survive and grow, Dennis said. Teaching small business financial literacy, for instance, goes a long way in ensuring their stability, he added.
“They’ve already pulled their boots up, they’ve done everything. But now you add that extra layer of a bill to it, and everything crumbles.”