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Investing in Racial Equity: The Economic Power of Black-Owned Commercial Properties

todayNovember 9, 2023

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Investing in Racial Equity: The Economic Power of Black-Owned Commercial Properties
Milwaukee’s Sherman Phoenix

In the wake of civil unrest following George Floyd’s tragic death, Black-owned businesses across the nation stood firm, their storefronts bearing messages of unity and a plea for protection. This brought to light a profound investment thesis: the idea that when Black individuals own local commercial real estate, they not only contribute to the economy but also create a bond with the community that safeguards and supports these enterprises. This concept is deeply rooted in the principle of “teranga” – a term for hospitality and community in Wolof, a language spoken in Senegal.

Brookings Metro’s recent initiative, the Buy Back the Block Lab, embarks on a mission to validate and empower this thesis. This initiative is not merely academic; it’s an active collaboration with developers and community partners in cities like Baltimore, Cleveland, and Detroit, aiming to rectify the racial ownership gap in commercial real estate (CRE) that precedes the racial wealth gap. Brookings’ research starkly highlights the disparity: a mere 3% of Black households own nonresidential CRE compared to 8% of white households, with a glaring difference in value owned.

The implications of this disparity are profound, as nonresidential CRE ownership influences community vibrancy and wealth generation. With an overwhelming 81% of nonresidential CRE value owned by the top 1%, the challenge becomes clear. The vast potential for Black wealth-building through CRE is further undermined by the systemic undervaluation of properties in majority-Black neighborhoods. This undervaluation, estimated to result in wealth losses of $171 billion in retail space, not only affects individual owners but also local governments that rely on property tax revenue for public services.

This systemic devaluation of CRE in Black neighborhoods raises a cycle of under-valuation and over-assessment that perpetuates fiscal distress within these communities. Brookings’ initiative aims to challenge and change this cycle by developing innovative ownership models that empower Black individuals and communities to own, appreciate, and benefit from CRE assets.

The Buy Back the Block Lab is more than just an economic movement; it’s a holistic approach to community-centered economic development. It seeks to build a model that balances the creation of wealth for individual residents and local entrepreneurs with the preservation of community identity and affordability. By collaborating with local leaders and utilizing concepts of shared ownership that move beyond conventional models, the Lab’s goal is to craft inclusive CRE investment vehicles that serve the community and foster long-term economic growth.

In their comprehensive effort, Brookings and its partners will produce a “playbook” to guide communities nationwide in adopting practices that promote community-centered economic development. This approach could pave the way for a new era of economic empowerment not only for Black communities but for all groups that have been marginalized or excluded from traditional financial services.

The Buy Back the Block Lab represents a beacon of hope and a testament to the power of ownership and investment in creating lasting, generative change. For more in-depth insights and to understand the full scope of this groundbreaking work, visit the Brookings report.

This initiative by Brookings is a step towards a future where racial equity in commercial real estate ownership becomes a cornerstone for community wealth and empowerment, where every investment is a step towards inclusivity, stability, and prosperity for all.

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Written by: HYFIN

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