How Can We Protect Independent Businesses from Increasing Rents
Jeffrey’s Toys is a decades old toy store in Downtown San Francisco and they have managed to stay profitable in the age of e-commerce. They are closing doors though because their landlord just jacked up their rent to 40,000 dollars a month. (Link is to video).
They are joining a long list of independent businesses that are getting kicked out because they can’t afford to pay rent as compared to start-ups loaded with venture capital or huge corporate entities. As I have mentioned before, there are whole blogs dedicated to bemoaning the corporitization and brandification of urban spaces. The best way of independent businesses is to stay alive is to own their building.
I have mixed views on how horrible it is that independent businesses are closing down or not. Nothing lasts forever and there are a million reasons that businesses close down. There is no moral requirement to keep a business going forever and the children and grandchildren of the founders don’t have to keep something open just because it has history or gives the locals warm-fuzzies. Other businesses can’t keep up with the times and the fashion. A lot of friends bemoaned the closing of Cafe Edison, I don’t think they are at Cafe Edison very often (if ever!!). My neighborhood in San Francisco is undergoing gentrification very quickly. Some of the businesses in the neighborhood learned to change with the times by purchasing craft beers and other hipster goods. Others did not. One cavernous convenience store closed down and is now a upmarket hipster/yuppie grocery store and ice cream parlor.
However, markets yay! is not a complete view of things working. There are plenty of small and profitable businesses that just can’t compete against big corporations like Apple or J.Crew when it comes to paying rent. The grocery store on Cobble Hill was a profitable business but not profitable in the same way J.Crew is profitable. I do believe that a neighborhood is a tricky and potentially impossible balancing act between the rights of property owners and the needs and concerns of local residents. A grocery store, a fruit and vegetable business, a butcher, and maybe even a book shop are businesses that cater to residents. J.Crew does cater to local residents but not completely. I have a lot of sympathy for residents when they complain about local businesses being chased out by chains.
This doesn’t help answer the question about how to help independent businesses stay open and how to balance property rights with the needs of residents. San Francisco has an anti-chain store law but this hasn’t prevented chains from moving in. The difference is the chains that move in. Instead of the Gap and Banana Republic, San Francisco neighborhoods have smaller and more expensive chains like Rag & Bone, Steven Alan, Sandro, and GNAT Rugger. There are still some neighborhoods that are well stocked on restaurants and boutiques but low stocked on things like grocery stores like Hayes Valley.
Jeremiah’s Vanishing New York is angling for the passage of something called The Small Business Jobs Survival Act.
Excessive nostalgia is not good. Trapping a city in amber can destroy it as much as an increase of chains. And as I’ve mentioned before I hate when people wax nostalgic about when Times Square was dominated by pimps, drug deals, and muggings. Yet despite economists, libertarians, and neo-liberals railing against money being left on the table, I think it might be necessary from time to time to help people compete.
What is to be done?