How can real estate investors best see the signs of a changing neighborhood? In general, the signs arise slowly, but alert investors can find patterns based on past gentrification successes. Changes in residents, storefronts, types of local services offered and more can all point to potential growth for a certain neighborhood.
Assessing Property Valuation Solutions
Gentrification of changing neighborhoods has been seen as an economic plus for communities to improve, adapt and grow; and it has served neighborhoods well, from Williamsburg and Greenpoint in Brooklyn, NY, to Downtown Los Angeles, CA, inspiring areas for new visions, new ideas and new people.
At the same time, gentrification today is under attack. Some argue that gentrifying a changing neighborhood only serves the wealthy and displaces lower-income residents, but in fact, investors argue, gentrification can actually enrich the lives of those already there. It brings about more job opportunities, social and cultural enrichment, increased homeowner values and possibly even tangential boosts to local residents’ economic status.
To help investors with data on changing neighborhoods, real estate investors can use DataTree to seek out data to develop economic property valuation solutions. DataTree offers comparable data on changing neighborhoods to assess changing property values in neighborhoods all across the U.S.
Signs of a Good Neighborhood
Changing neighborhoods offer areas of opportunity for real estate developers. Older or mismanaged investment properties can be refurbished, bringing in higher rents in the coming years. Shuttered storefronts can be bought for cheap, and leased out to local entrepreneurs for their new coffee shop, bookstore, pizza outlet or record store. Income from these rentals can help facilitate the purchase of larger real estate investment in this gentrifying neighborhood.
Investors can find property valuation solutions by using data, research and meetings with local civic officials. They can also look for the following signs of a gentrifying neighborhood. If these establishments have begun in a neighborhood, then it’s likely that gentrification is underway.
An Increase in Vintage Clothing Stores
It’s become an axiom in gentrification talk that once the coffee shops have come to town, then everyone else follows. But all kinds of entrepreneurial-driven businesses are moving into slowly gentrifying neighborhoods to look for profits. Take for example, vintage clothing stores. A few years ago, these resale stores would not have been seen as a harbinger of growth for a community. But as Millennials and urban hipsters seek out clothing that’s different from the mass-produced goods at big box chain stores, vintage clothing stores are growing in urban renewal areas. Investors can see this as a good sign of gentrification, and look to develop other unused store spaces accordingly.
New Breweries Opening
Another indication of a changing neighborhood offering investment potential for real estate developers is in the establishment of microbreweries and brewpubs. The numbers have doubled since 2010, according to the U.S. Brewers Association. While recent trends show that opening up a brewery may be peaking, there are still many towns without local breweries to call their own. Investors can dig deep to see the opportunity there.
Hip New Clothing Stores
Like the vintage clothing resale store example above, young people are eschewing the clothes available at big box stores like Walmart and Target in favor of trendy local outlets. These stores may not be in the local gentrification for the long haul. There are many pop-up stores aimed at today’s city 20-somethings. These pop-up stores may only be open for months at a time, and are often used as a physical extension of their website. But as more of these stores come into towns, and attract young people, investors can find equitable opportunities to move in alongside.
Upscale Grocery Stores
Small grocery chain outlets that offer more "on-the-go" items aimed at younger, more mobile shoppers are also on the rise in gentrifying neighborhoods. If you’re an investor, and see early signs of a new Trader Joe’s or Whole Foods in construction, then it’s time to move ahead with local real estate partnerships in these areas.
Urban gentrification is winning the battle against blight, and reversing economic fortunes in older communities. But not everyone agrees with the methods surrounding gentrification. Real estate investors should be aware of signs that some older, ethnic neighborhoods are resisting gentrification methods that have helped other neighborhoods prosper. It’s clearly a real issue for real estate developers to manage in their portfolio growth in the coming years.
DataTree can help. We are a national provider of property data and document images to mortgage and real estate-related businesses. Our database holds information on over 6 billion recorded deeds and property transaction related documents. Investors who use DataTree get the data, property reports and document images to help them make more informed business decisions about investing in changing neighborhoods.