Movin' On Up
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Trina Sheridan cried when her husband-to-be, Sean, bought a building in a decayed neighborhood north of downtown Chicago with plans to open a business. "I was very depressed," says Sheridan, 41, recalling the gangs, graffiti and crumbling storefronts around the two-story retail and living space. That was in 1998. By 2002, the Andersonville neighborhood was experiencing a renaissance, and the Sheridans opened a cookware store there.
Today, the Sheridans preside over a healthy business with four employees and six-figure sales growing 10 percent annually. An increasing number of new businesses are moving into the reviving neighborhood. "There used to be a lot of vacant stores and businesses that people didn't take care of," Trina says. "And they're all gone."
The gentrification process that turned Andersonville from a source of tears to a source of inspiration for these entrepreneurs is occurring in countless neighborhoods across America. Some, like Andersonville and other parts of Uptown on Chicago's North Side, are well-known, and some, such as the Bushwick section of Brooklyn in New York City, are gaining similar reputations. But many more represent unsung opportunities for entrepreneurs as savvy and nervy as the Sheridans.
Diane Levy, a researcher at the Urban Institute, a Washington, DC, think tank, sifted through reams of data and interviewed city officials to identify some of the nation's principal nodes of gentrification for a research paper published in 2006. These include Bartlett Park in St. Petersburg, Florida, and Oak Park in Sacramento, California, which are in the early stages of the process; Figueroa Corridor in Los Angeles and Reynoldstown in Atlanta, which are in the middle stages; and Central Area in Seattle and Uptown in Chicago, in the late stages.
It's sometimes said that the presence of artists in a downtrodden neighborhood is a precursor to gentrification. Others point to investments from entrepreneurs in long-ignored areas. But Levy argues that the near-essential factor of all gentrifying areas is access to employment. "There has to be a draw for people to come to the areas," she says. "In large part, that's going to be jobs."
Trends toward bigger mortgages, more home sales and growing buyer income are also indicators of gentrifying neighborhoods, says Levy, who consulted data from the Home Mortgage Disclosure Act to identify her candidates. City plan-ners added local expertise and helped refine the list.
Spot emerging areas before others by looking for blighted areas close to jobs. Local economic development councils can help identify local employment clusters. Track trends in home sales, mort-gages and income at websites for the U.S. Bureau of Labor Statistics, Census Bureau and Federal Financial Institutions Examination Council, which publishes Home Mortgage Disclosure Act data. Watch what other entrepreneurs are doing. Gentri-fication is usually gradual, so you don't have to be there first. If jobs, home sales, mortgages, income and other entrepreneurs all point to a neighborhood, gentrification is likely underway, or about to be.
Though gentrification can benefit entrepreneurs, some-like the Sheridans-are often essential to the process, notes Ellen Shepard, executive director of the Andersonville Chamber of Commerce. "They took a risk in opening stores in a neighbor-hood that some people thought was weak," she says. Another key Shepard points to: A local banker was willing to lend the Sheridans seed money.
Gentrification is an uncertain process. It may take a decade to play out, and it's hard to predict whether a given neighborhood will mature as expected or stall if the local economy changes. Low interest rates and ready availability of home mortgages are two nationwide trends that have driven the process recently, and higher rates or reduced lending could affect overall gentrifying activity, Levy says.
Gentrification also spins off effects that aren't entirely positive. Rising rents and property values can force longtime residents to relocate. The same thing can happen to local entrepreneurs if national players flood in as the local market becomes more attractive. In either event, community activists may resist gentrification or demand a seat at the table when entrepreneurs are making decisions about real estate and other investments in a gentrifying district.
Trina Sheridan cites the initial loneliness of being an entrepreneurial urban pioneer as a major challenge. But today the gentrification trend has firmly established itself in her market. "More businesses are opening on our block, and people are starting to come down here," says Sheridan. "And they're going to come down more."