Houston commercial real estate in underserved areas are a tool for community development
While community revitalization may be a multifaceted issue, housing is essentially the driver. It is the cornerstone of other social determinants of health like education, healthcare and economic stability. The tax base created by housing stock and land ownership play a pivotal role in how the other determinants are addressed and prioritized. Commercial property is one of the most overlooked yet influential aspects of “housing” stock. Even with the emergence of economic development as a buzzword over the last decade, commercial space and its impact is largely left out of revitalization discussions. Focusing on both residential and commercial spaces in revitalization efforts provides a balanced approach that creates stability and opportunity, where both are needed.
Commercial property, like homes, provide safe spaces for families and individuals to thrive and fulfill their needs. Traditionally, commercial real estate is evaluated solely by the profit it can generate based on local demographics. In Houston Complete Communities like Third Ward, Sunnyside, or Acres Homes the current demographics don’t accurately reflect the value beyond the numbers. How can we account for the access to goods and services that commercial property in these communities provide to residents who may not have the transportation or means to otherwise receive them? It could be argued that in this regard, commercial property or “housing” is just as much of a public need as a stable home.
The reality is that most corridors sit vacant and blighted until the “right” time for investment; making it even harder to revitalize an area. Commercial corridors carry people from outside the area through the neighborhood and thus reflect the community, its desires and the people who live there. Historically underserved communities should reflect the richness of the inherent culture rather than sunk value. Here are some ways we can begin to properly valuate the commercial spaces that house entrepreneurs and businesses in historically underserved communities:
Public financing tools
At an event hosted by The 3rd Ward Real Estate Council, subject matter experts discussed the importance of connecting corridors to broader revitalization efforts and how to accomplish it collaboratively across public, private, philanthropic, and community sectors. Houston has long incentivized large-scale developers to build, but lacks tools for those building at a smaller neighborhood scale that is more in line with the needs of the area. Financial and tax incentives offered by the city should be scaled to fit both large and small scale developments; access to these resources must be equitable. Smaller developers have less capacity than the large corporations. Existing tools in most cities' financial structure, such as recoverable grants, interest only loans, and forgivable grants can help fill gaps in small capital stacks.
Policy for Incremental retail
What and how we build can create a more balanced approach to housing. Adoption of incremental retail practices is a great way to begin utilizing commercial space while incubating or providing space for small businesses and entrepreneurs. The use of commercial space has drastically changed over the past few years prompting many to seek smaller retail/office footprints, temporary uses, and shared spaces. This creates a myriad of possibilities between a vacant or blighted lot/building and a new development. Shipping containers, retail sheds, food trucks or tents with consistent activity are all opportunities to earn income from an underutilized space without having to invest significant capital. To support incremental retail, policy in Houston must be revised so owners aren’t penalized for not fully developing their property and being held accountable to standards that don’t apply to a smaller scale of development. For example, grease traps and sidewalk improvements in order to operate a 150 sq ft box is unreasonable. Policy must be revised and right sized for intended use and outcomes.
Collaboration
Last, but not least, is intentional collaboration. In a disenfranchised community with limited resources this is hard to accomplish, but paramount. Typically, we look at public private partnerships as a way to collaborate in order to produce housing. Today, we must look at the philanthropic community-at-large differently. Traditionally, the philanthropic community has attempted to fill gaps through programming that isn’t sustainable and resources that don’t directly address the problem. Residents are engaged for input, but tend to benefit indirectly. For example, residents are engaged to determine what is needed in a community and benefit from the introduction of new businesses and homes, but do not have any ownership or input after the fact. Merging the philanthropic world with the community to leverage public/private resources and partnerships is a pathway to filling additional financing gaps. Where public/private partnerships fall short, crowdfunding and improved communication channels help facilitate better collaboration across sectors.
As we look for ways to build thriving communities, top down policy and planning is ineffective without bottom up feedback and integration into the solution. It is important to craft solutions that fit the intended community and market dynamics. This means reframing how we think about housing within a community. Housing should encompass all things in a community that require space; not just a limited, underserved demographic and rooftops, but storefronts, goods and services as well. Commercial spaces are the first line of defense in community development.
