8 ms·

Neighbors Got Together to Buy Vacant Buildings. Now, Renting to Bakers and Brewers

178 points by sebkomianos 12y ago

spiritplumber 12y ago
Brilliant! This is how you fight urban blight. Bottom up solutions may not scale up well, but they are efficient and the only sort that makes sense at this level.
- akgerber 12y ago
  These sort of bottom-up solutions are enabled when the right conditions come from the top, too, as discussed in the 'Policy to help investment co-ops spread' section.
- taurath 12y ago
  Sometimes the goal is to scale at exactly the size of the group doing it, and stay there. If everything is mass market then there's no individualism or culture.
  - bswen 12y ago
    Indeed. But these kinds of tactics can scale by being replicated by other, similarly small, local groups.
  - wozniacki 12y ago
    If everything is mass market then there's no individualism or culture. Would you expand on this? I'm interested in knowing how you mean this. I ask in the context of the larger debate of who deems a commercial establishment - a place of commerce - culturally relevant and which ones culturally distracting. Does the neighborhood take a poll on a NextDoor bulletin board as to whether let a Wine bar set up shop, down the street but not a Gastropub, because you know it attracts a culturally misfitting crowd? So the majority wins? As simple as that? Then what's stopping a billionaire buying up some four blocks and instilling his own brand of culture, you know cigar shops, vintage firearms shops and a boutique golf shop, through a bunch of proxies and trusts? These are very valid questions that need answering if we want to meaningfully advance the debate of who gets to manufacture "individualism" and what is vended as "culture".
    - kristopolous 12y ago
      they are totally different. The workers having sovereignty over their own business produces a dramatically different outcome than classical capitalism. The constitution of a thing is partially dependent on the infrastructure behind it. For instance, I have a local grocer who owns the grocery shop. I have asked the grocer to stock things I'd like to buy which aren't there. The grocer has stocked them. I buy them so predictably that the grocer sets a quantity aside for me individually. These patently obvious social courtesies at a corporate level become policy decisions with a marketing campaign. If some big chain did it, they'd give it some stupid name like "YouChoose" and then have a jingle and some commercial to go along with it. The idea of engaging with the customer in this way would be commoditized an shoved down our throats. If some entrepreneur thought of it, they'd turn it into some consumerist share-style phone app backed by $10 million in VC capital. The first one is totally different from the last two. It's not the same thing. Quantifying a value is not the same as Qualifying an experience. Starbucks has done this recently - trying to fight independent coffee shops, not with hiring competent people and giving them liberty to make purchasing decisions and take control of the means of producing coffee, no. They have introduced a new machine called the "clover" that supposedly makes better coffee. They are going up against local roasters and people trying to take food service seriously with yet another shitty little product from corporate america. big fucking whoopdie doo - that's all they do. so when you have a distant billionaire try to come up with a new variation of westfield and then structure it like a process based corporation, it simply won't work. people are sick of being characterized as consumers, the culture of consumption, sick of being advertised to where everything becomes a product with a sanitized, transactional exchange of goods and money, to go about some soulless mechanized existence. Capitalism and community are enemies. The classic structure of neo-liberal consumer capitalism is completely incompatible with this movement - it's a fundamentally different constitution of culture, control, and capital.
      - dagw 12y ago
        They have introduced a new machine called the "clover" that supposedly makes better coffee. I remember all the cool coffee shops used to have a Clover machine 5 or 6 years ago. I also remember it making pretty great coffee. Then they kind of disappeared and everybody went back to espresso based coffee drinks. I actually kind of miss the Clover and the french press style coffee it made, and would be happy to frequent any coffee shop that reintroduced it.
  - cbd1984 12y ago
    > If everything is mass market then there's no individualism or culture. This is just a total misunderstanding of what culture is.
- eldavido 12y ago
  What about it doesn't "scale up well" and why is this a concern? I've been thinking about creating a tech platform to facilitate coinvestment. I have a brother who lives in Houston and we often talk about buying a rental property together, I'd like a way to track that. Just the mechanical process of processing the payments and doing accounting for shared stuff like this can be a real pain. But I think it's a really good thing when neighbors get together and buy stuff like local buildings; rental real estate ownership (especially commercial) has been seen as something only the rich do for a long time in US, and I have no idea why that's the case.
  - TTPrograms 12y ago
    I'm under the impression that one of the primary challenges with coinvesting is valuating time or effort spent on the investment, especially in the case of real estate where one person might act as the landlord and/or perform repairs. At least, this seems harder compared to the effort of maintaining an excel spreadsheet with the appropriate divisions of cost and revenue.
brudgers 12y ago
Non-profit redevelopment corporations have long been a tool for urban redevelopment. Often they are public-private partnerships, but often they are independent.
- jubjub 12y ago
  These businesses are not non-profits. That's a common misconception about cooperatives.
deleted 12y ago
[deleted]
ChuckMcM 12y ago
I think this is really awesome. At the same time it illustrates the serious impact that losing 'home town banks' has had on a lot of places.
- eldavido 12y ago
  If banks are just capital aggregators, do you think another party could play that role in the future? Like a mini-family office where 2-3 families get together, put in 10-20k each to get enough equity, and invest in a portfolio of assets? Or am I just living in a bubble where people aren't in massive consumer debt and have disposable income?
  - ChuckMcM 12y ago
    Capital aggregation isn't the only role of the bank but it is an essential one. And certainly groups of people can provide that same service, at some point though it might seem simpler to simply be a bank[1] :-) but putting that aside it is almost exactly the VC model. [1] I know that sounds ridiculous, because being a bank is anything but simple, but back in the 90's I watched some investment "clubs" become large enough to attract the attention of the SEC which then required a bunch of legal work and various other financial regulation compliance issues until it seemed like they had morphed into banks.
    - eldavido 12y ago
      Chuck as I'm sure you know, VC is just a subset of the larger world of private equity in general. What I'm wondering is why PE has traditionally been practiced only by high-net worth households/institutions. I wonder what it would take to get a $50k neighborhood investment club together. My father told me his father used to do this with a few friends back in Illinois in the 50s and 60s, but it seems less common now, maybe because more people have brokerage accounts and commissions are lower? Hard to say. But I don't like how "professionalized" investment has become, there's so much more to it than that, and I know for sure there's lots of small-town restaurant/grocery store/real estate deals happening that are small-scale and organized by a few friends.
drpgq 12y ago
You can do things other than just invest in regular stocks and mutual funds with your RRSP? I've got to look into this.
- khuey 12y ago
  In the US equivalent, the IRA, you have to be very careful with this. You're not allowed to e.g. buy a blighted property with your IRA, fix it up with your labor/materials purchased with money from outside the IRA, and then sell and accrue the gains in the IRA. If you were it would effectively allow you to circumvent the contribution limits.
remarkEon 12y ago
I grew up in Minneapolis and went to high school in downtown right off St. Anthony. I haven't lived there since 2006, but have been peripherally aware of the "revival" going on in Minneapolis and how it's been just a little bit different than other types of urban gentrification you see in other cities (like Seattle, where I'm living now). Minneapolis has always been a "friendly" city, so to me it's no surprise that something like this has popped up. This seems to be an investment instance where incentives are aligned in the right ways - community buy-in is necessary for this to work. The homeowners who are members know that the healthier the commercial corridor is, the more their homes are worth. Indeed, and I hope this continues. I spent a lot of my childhood driving to rural Minnesota, Iowa, and South Dakota and doing those drives now can be depressing. The failure of community banking has left the towns dotting the 212 between Minneapolis and Watertown destitute. Curious if there's any way to adapt this model to rural areas that are faced with things like the forced-consolidation of school districts, among other issues.
aaron695 12y ago
Although trolling the second comment in the article I think said a lot "TL;DR: White folks stay winning." This is not a sustainable model and I really don't get why people think because a place once had people it always should have people. Some people fear change I guess, things should stay the same as it has always been within their life span, this realy isn't aimed at the poor who can't afford to move.
- remarkEon 12y ago
  I think this comment is ill-conceived. There is no reason this model is exclusive to whites. Northeast Minneapolis in particular is considerably more racially integrated than other satellite urban areas. Here's a great visualization of this fact [1]. If you take a look, you'll notice that there are areas of Minneapolis that are considerably less racially integrated than others. In those cases, again, I do not see a reason why this model is exclusive to whites. [1] http://demographics.coopercenter.org/DotMap/index.html http://demographics.coopercenter.org/DotMap/index.html
  - aaron695 12y ago
    It's more around first world problems. This article is a rich person problem. Only they are so arrogant they think the suburb should fit them. Poor people just struggle. The white bit is purely about dumb rich white people thinking the world is about them because their hundreds of thousands dollar morgage weighs them down. The two billion on 2 dollars per day are mostly not white
    - ianstallings 12y ago
      So the moral of the story is stop trying to improve your neighborhood because there are more important issues in someone else's life? I've actually been poor in my life. Like on welfare government cheese Appalachian coal-mining-town-went-busto poor. And for some reason, these people improving their own neighborhood doesn't make me feel bad at all.
- laumars 12y ago
GigabyteCoin 12y ago
I suppose if the buildings every go up for sale, this would be a possibility. In my hometown, approximately 50% of the retail space in our downtown has been vacant and listed "For lease" for I'd say about the past 2 years now. The owners are very wealthy, continually raise rental prices, eventually driving everybody out. The problem is, they never intend to sell. I witnessed an old bank building sit vacant for literally 20 years before they found a new tenant who was willing to renovate and start paying. Somebody was paying the property taxes on it the entire time, and they weren't even actively marketing it's lease as much as they could have been. Another old store went under about 2 years ago, and it has been empty ever since with a for-lease sign on it. Nobody has entertained the new lease, but the owners refuse to lower the price or sell the property. In fact, I have never in the life of me seen a for sale sign on any of the downtown retail properties. It just doesn't happen. Old money can be one hell of a burden on old communities, it would seem.
- x0x0 12y ago
  If you called with a serious offer, do you think you would be turned down? Though I guess stuff like this happens even in sf. Que Tal -- a coffee shop in mission -- got kicked out by their landlord massively increasing rent in August 13. I walked past their old location a month ago and it was still empty, and it didn't look like there was construction going on. So the landlord has eaten 17+ months of rent so far.
  - deleted 12y ago
    [deleted]
  - seabee 12y ago
    Seems like potential gains aren't as motivating as actual costs.
  - GigabyteCoin 12y ago
    In the case of the beautiful old bank building that sat vacant for 20 years. There wasn't even a number to call. Everybody just walked past it for decades saying "I wonder what if anything they'll ever do with that place?". I'm assuming you had to know the "right people" to even get an appointment to purchase or lease, but I'm not sure why.

178 points by sebkomianos 12y ago

Brilliant! This is how you fight urban blight. Bottom up solutions may not scale up well, but they are efficient and the only sort that makes sense at this level.

akgerber 12y ago
These sort of bottom-up solutions are enabled when the right conditions come from the top, too, as discussed in the 'Policy to help investment co-ops spread' section.
taurath 12y ago
Sometimes the goal is to scale at exactly the size of the group doing it, and stay there. If everything is mass market then there's no individualism or culture.
- bswen 12y ago
  Indeed. But these kinds of tactics can scale by being replicated by other, similarly small, local groups.
- wozniacki 12y ago
  If everything is mass market then there's no individualism or culture. Would you expand on this? I'm interested in knowing how you mean this. I ask in the context of the larger debate of who deems a commercial establishment - a place of commerce - culturally relevant and which ones culturally distracting. Does the neighborhood take a poll on a NextDoor bulletin board as to whether let a Wine bar set up shop, down the street but not a Gastropub, because you know it attracts a culturally misfitting crowd? So the majority wins? As simple as that? Then what's stopping a billionaire buying up some four blocks and instilling his own brand of culture, you know cigar shops, vintage firearms shops and a boutique golf shop, through a bunch of proxies and trusts? These are very valid questions that need answering if we want to meaningfully advance the debate of who gets to manufacture "individualism" and what is vended as "culture".
  - kristopolous 12y ago
    they are totally different. The workers having sovereignty over their own business produces a dramatically different outcome than classical capitalism. The constitution of a thing is partially dependent on the infrastructure behind it. For instance, I have a local grocer who owns the grocery shop. I have asked the grocer to stock things I'd like to buy which aren't there. The grocer has stocked them. I buy them so predictably that the grocer sets a quantity aside for me individually. These patently obvious social courtesies at a corporate level become policy decisions with a marketing campaign. If some big chain did it, they'd give it some stupid name like "YouChoose" and then have a jingle and some commercial to go along with it. The idea of engaging with the customer in this way would be commoditized an shoved down our throats. If some entrepreneur thought of it, they'd turn it into some consumerist share-style phone app backed by $10 million in VC capital. The first one is totally different from the last two. It's not the same thing. Quantifying a value is not the same as Qualifying an experience. Starbucks has done this recently - trying to fight independent coffee shops, not with hiring competent people and giving them liberty to make purchasing decisions and take control of the means of producing coffee, no. They have introduced a new machine called the "clover" that supposedly makes better coffee. They are going up against local roasters and people trying to take food service seriously with yet another shitty little product from corporate america. big fucking whoopdie doo - that's all they do. so when you have a distant billionaire try to come up with a new variation of westfield and then structure it like a process based corporation, it simply won't work. people are sick of being characterized as consumers, the culture of consumption, sick of being advertised to where everything becomes a product with a sanitized, transactional exchange of goods and money, to go about some soulless mechanized existence. Capitalism and community are enemies. The classic structure of neo-liberal consumer capitalism is completely incompatible with this movement - it's a fundamentally different constitution of culture, control, and capital.
    - dagw 12y ago
      They have introduced a new machine called the "clover" that supposedly makes better coffee. I remember all the cool coffee shops used to have a Clover machine 5 or 6 years ago. I also remember it making pretty great coffee. Then they kind of disappeared and everybody went back to espresso based coffee drinks. I actually kind of miss the Clover and the french press style coffee it made, and would be happy to frequent any coffee shop that reintroduced it.
- cbd1984 12y ago
  > If everything is mass market then there's no individualism or culture. This is just a total misunderstanding of what culture is.
eldavido 12y ago
What about it doesn't "scale up well" and why is this a concern? I've been thinking about creating a tech platform to facilitate coinvestment. I have a brother who lives in Houston and we often talk about buying a rental property together, I'd like a way to track that. Just the mechanical process of processing the payments and doing accounting for shared stuff like this can be a real pain. But I think it's a really good thing when neighbors get together and buy stuff like local buildings; rental real estate ownership (especially commercial) has been seen as something only the rich do for a long time in US, and I have no idea why that's the case.
- TTPrograms 12y ago
  I'm under the impression that one of the primary challenges with coinvesting is valuating time or effort spent on the investment, especially in the case of real estate where one person might act as the landlord and/or perform repairs. At least, this seems harder compared to the effort of maintaining an excel spreadsheet with the appropriate divisions of cost and revenue.

brudgers 12y ago

Non-profit redevelopment corporations have long been a tool for urban redevelopment. Often they are public-private partnerships, but often they are independent.

jubjub 12y ago
These businesses are not non-profits. That's a common misconception about cooperatives.

deleted 12y ago

[deleted]

ChuckMcM 12y ago

I think this is really awesome. At the same time it illustrates the serious impact that losing 'home town banks' has had on a lot of places.

eldavido 12y ago
If banks are just capital aggregators, do you think another party could play that role in the future? Like a mini-family office where 2-3 families get together, put in 10-20k each to get enough equity, and invest in a portfolio of assets? Or am I just living in a bubble where people aren't in massive consumer debt and have disposable income?
- ChuckMcM 12y ago
  Capital aggregation isn't the only role of the bank but it is an essential one. And certainly groups of people can provide that same service, at some point though it might seem simpler to simply be a bank[1] :-) but putting that aside it is almost exactly the VC model. [1] I know that sounds ridiculous, because being a bank is anything but simple, but back in the 90's I watched some investment "clubs" become large enough to attract the attention of the SEC which then required a bunch of legal work and various other financial regulation compliance issues until it seemed like they had morphed into banks.
  - eldavido 12y ago
    Chuck as I'm sure you know, VC is just a subset of the larger world of private equity in general. What I'm wondering is why PE has traditionally been practiced only by high-net worth households/institutions. I wonder what it would take to get a $50k neighborhood investment club together. My father told me his father used to do this with a few friends back in Illinois in the 50s and 60s, but it seems less common now, maybe because more people have brokerage accounts and commissions are lower? Hard to say. But I don't like how "professionalized" investment has become, there's so much more to it than that, and I know for sure there's lots of small-town restaurant/grocery store/real estate deals happening that are small-scale and organized by a few friends.

drpgq 12y ago

You can do things other than just invest in regular stocks and mutual funds with your RRSP? I've got to look into this.

khuey 12y ago
In the US equivalent, the IRA, you have to be very careful with this. You're not allowed to e.g. buy a blighted property with your IRA, fix it up with your labor/materials purchased with money from outside the IRA, and then sell and accrue the gains in the IRA. If you were it would effectively allow you to circumvent the contribution limits.

remarkEon 12y ago

I grew up in Minneapolis and went to high school in downtown right off St. Anthony. I haven't lived there since 2006, but have been peripherally aware of the "revival" going on in Minneapolis and how it's been just a little bit different than other types of urban gentrification you see in other cities (like Seattle, where I'm living now). Minneapolis has always been a "friendly" city, so to me it's no surprise that something like this has popped up. This seems to be an investment instance where incentives are aligned in the right ways - community buy-in is necessary for this to work. The homeowners who are members know that the healthier the commercial corridor is, the more their homes are worth. Indeed, and I hope this continues. I spent a lot of my childhood driving to rural Minnesota, Iowa, and South Dakota and doing those drives now can be depressing. The failure of community banking has left the towns dotting the 212 between Minneapolis and Watertown destitute. Curious if there's any way to adapt this model to rural areas that are faced with things like the forced-consolidation of school districts, among other issues.

aaron695 12y ago

Although trolling the second comment in the article I think said a lot "TL;DR: White folks stay winning." This is not a sustainable model and I really don't get why people think because a place once had people it always should have people. Some people fear change I guess, things should stay the same as it has always been within their life span, this realy isn't aimed at the poor who can't afford to move.

remarkEon 12y ago
I think this comment is ill-conceived. There is no reason this model is exclusive to whites. Northeast Minneapolis in particular is considerably more racially integrated than other satellite urban areas. Here's a great visualization of this fact [1]. If you take a look, you'll notice that there are areas of Minneapolis that are considerably less racially integrated than others. In those cases, again, I do not see a reason why this model is exclusive to whites. [1] http://demographics.coopercenter.org/DotMap/index.html http://demographics.coopercenter.org/DotMap/index.html
- aaron695 12y ago
  It's more around first world problems. This article is a rich person problem. Only they are so arrogant they think the suburb should fit them. Poor people just struggle. The white bit is purely about dumb rich white people thinking the world is about them because their hundreds of thousands dollar morgage weighs them down. The two billion on 2 dollars per day are mostly not white
  - ianstallings 12y ago
    So the moral of the story is stop trying to improve your neighborhood because there are more important issues in someone else's life? I've actually been poor in my life. Like on welfare government cheese Appalachian coal-mining-town-went-busto poor. And for some reason, these people improving their own neighborhood doesn't make me feel bad at all.
laumars 12y ago

GigabyteCoin 12y ago

I suppose if the buildings every go up for sale, this would be a possibility. In my hometown, approximately 50% of the retail space in our downtown has been vacant and listed "For lease" for I'd say about the past 2 years now. The owners are very wealthy, continually raise rental prices, eventually driving everybody out. The problem is, they never intend to sell. I witnessed an old bank building sit vacant for literally 20 years before they found a new tenant who was willing to renovate and start paying. Somebody was paying the property taxes on it the entire time, and they weren't even actively marketing it's lease as much as they could have been. Another old store went under about 2 years ago, and it has been empty ever since with a for-lease sign on it. Nobody has entertained the new lease, but the owners refuse to lower the price or sell the property. In fact, I have never in the life of me seen a for sale sign on any of the downtown retail properties. It just doesn't happen. Old money can be one hell of a burden on old communities, it would seem.

x0x0 12y ago
If you called with a serious offer, do you think you would be turned down? Though I guess stuff like this happens even in sf. Que Tal -- a coffee shop in mission -- got kicked out by their landlord massively increasing rent in August 13. I walked past their old location a month ago and it was still empty, and it didn't look like there was construction going on. So the landlord has eaten 17+ months of rent so far.
- deleted 12y ago
  [deleted]
- seabee 12y ago
  Seems like potential gains aren't as motivating as actual costs.
- GigabyteCoin 12y ago
  In the case of the beautiful old bank building that sat vacant for 20 years. There wasn't even a number to call. Everybody just walked past it for decades saying "I wonder what if anything they'll ever do with that place?". I'm assuming you had to know the "right people" to even get an appointment to purchase or lease, but I'm not sure why.