Fostering Local Business Pays Off
Fostering Local Business Pays Off
It seems so obvious. Of course chic, boutique- and bistro-filled neighborhoods have higher property values than less-vibrant areas.
Now, there’s a tool that backs up that assumption with real numbers. Independent We Stand, a national group made up of small businesses, developed a calculator showing just how much a home’s value would have increased over a 14-year period if it was bolstered by a strong independent business district. The underlying data for the calculator found that in ZIP codes that contained a central district dominated by strong, independent businesses, home values went up 54.2 percent more on average than those without one.
This correlation between small-business strength and home values may have real estate professionals wondering how they can help entrepreneurs start up in their neighborhoods. Turns out there are plenty of ways to get involved.
Property Values = Community Values
“I was amazed at the percentage of impact,” says Coreen Gardiner, broker and sales manager at Coleman, REALTORS®, in Greenwich, R.I., in reaction to the home value calculator’s results for the Providence metro, which showed a 134 percent increase in home values.
Then again, Gardiner knows the importance of a strong local economy to real estate in her town. She’s a director on the board of the East Greenwich Chamber of Commerce, working to promote small businesses in the town’s commercial district along Main Street, where her office sits. The chamber hosts themed “Main Street Strolls” once a month, where stores stay open late and residents can take in sidewalk sales, performances, and special activities. Gardiner, whose Coleman office plans to host a blood drive during the next Main Street Stroll, says the events have a “block party” atmosphere.
“When we do those subtle things, it obviously helps increase the value of homes,” Gardiner says. “It helps the perception of a positive, growing economy. If somebody feels positive about a local economy, then they’re going to have confidence in buying here.”
Another recurring event designed to get residents investing in the local economy is called a “cash mob.” A group of shoppers and local businesspeople gather in a parking lot, each with a $20 bill in their hands. A local business is chosen at random, and the “cash mob” spends their money at the merchant’s shop.
The notion that small-town proprietors would willingly invest their cash in competitors’ businesses may seem counterintuitive. But Gardiner says it’s all part of the philosophy that fuels the local economy.
“It’s a concept to share the spirit of the community and the willingness of the merchants to work together to bring attention to the community, to help grow our community,” Gardiner explains. “While they’re in competition with one another, they all work together to complement and help each other’s businesses grow.”
The chamber even has a term to describe this approach to developing a thriving business corridor. Gardiner says that “BUCK,” which stands for Building Up Community with Kindness, is the “mantra” of New Greenwich’s local businesses. She adds that this cooperative spirit extends to the many real estate professionals competing for East Greenwich business.
“I call it ‘REALTOR® Row,’ because we have ten real estate brokerages along Main Street. But what’s unique about our community here is that, while we’re competitive, we also work to complement each other’s business,” Gardiner says. “On the chamber’s board of directors alone, I believe, we’ve got four professional REALTORS® who are aggressively involved in helping carry out the mission of the chamber.”
Building on Passion
While Gardiner likes to say that East Greenwich’s “property values are dependent on community values,” the same effort is quite different in a big city. And it doesn’t get a whole lot bigger than the New York borough of Brooklyn, which would be the fourth-largest city in the country if it were independent.
“The values of real estate, the people that live in the neighborhood, and the businesses that are supported there vary widely, [and] different neighborhoods survived the downturn in 2008 in very different ways,” explains Lori Raphael, director of external affairs at the Brooklyn Chamber of Commerce.
Raphael coordinates the work of the chamber’s Real Estate and Development Committee, a group of volunteers from the real estate, development, and finance communities. The committee holds tours, events, and seminars to highlight business opportunities. This summer, the group will hold its 12th annual Building Brooklyn Awards, an annual fund-raiser that recognizes construction projects that have a positive impact on Brooklyn’s economy and quality of life.
While the Brooklyn Chamber works to support business development in general, it’s making a targeted effort to foster Brooklyn’s emergent food industry through a massive rebranding effort.
“We’re working on repositioning our Brooklyn Eats brand to support our Brooklyn-based small food manufacturers,” Raphael says. “We’ve got this burgeoning small manufacturing industry: people who are very new to the business but have a passion for food, for locally-sourced ingredients. We really want to be there to support them and increase their distribution. ... We see this as a real growth opportunity.”
One way the chamber assists these small food manufacturers is to help secure funding and find the best place to start up in Brooklyn.
“We can actually package and shop loans around for small businesses. We do that through our business solutions center [NYC Business Solutions], which is a contracted service through the city of New York, and we are the Brooklyn provider,” Raphael says. “We’re meeting startups right in the beginning and helping them actually open.”
Not Always Easy as Pie
Even with the first-class support of a chamber of commerce, small businesses can run into significant bumps on the road to success.
Cheryl Perry, owner of Pie Corps, has found success pedaling her handmade savory and sweet pies at seasonal outdoor food markets. Pie Corps was ready to expand to larger catering and wholesale orders. NYC Business Solutions helped Perry secure a $25,000 loan to move from a kitchen incubator to a larger baking kitchen in the Greenpoint area of Brooklyn.
Perry believes a small storefront like the one she’s rented for Pie Corps can have a positive impact on local home values.
“It does increase property values, of course. But what we’re finding is it’s very difficult to secure the space in which to do that business,” she says.
After putting down a security deposit on the rental of the new, larger space, Perry was informed by the City of New York that the storefront was zoned for residential use only. In order to change their minds, she would need to provide tax documents as evidence of continuous commercial use of the building over the past 40 years, a feat Perry deems “an impossibility.”
“[NYC Business Solutions] really helped us get funds, but once that was done and the city took over, I mean, forget it,” she said. “The loan really is not being used at the moment because we cannot use the property.”
Pie Corps is still working out of its old spot, but Perry is worried about how she’ll pay rent on both locations at once. She added that she can think of at least three other small-business owners who are also unable to expand because of the city’s zoning restrictions.
“There are many small businesses waiting for the city to give them permission to use their space,” Perry said. “It’s a very hard situation for us because we’re a small business. We don’t have money to throw around. ... If you’re a big company, you have the money to pay and the time to ride it out.”
How to Invest in Business Development
The needs of small-business owners are indeed different than those of large chains and multinationals. Since they are often independent entrepreneurs with their finger on the pulse of their communities, real estate professionals are in a great position to help, Gardiner says.
“We are a small business. That’s why I felt it was important for me to get involved in the local chamber,” she says. “It’s an important piece of what we draw our income on, and I preach that to our sales team.”
Raphael’s advice for real estate professionals interested in supporting local business development is to invest themselves fully in local chambers.
“Our most active members necessarily get the most out their membership,” Raphael explains. “It’s really important to nurture those relationships, do some committee work, and do something that feels meaningful to you. And the recognition for being the expert in your field will follow.”