When word of this real estate cooperative concept leaked into the board room at One Southern Indiana, Wendy Dant Chesser leaped to attention and said, “Communist? Not at River Ridge, and not on my watch.”
How Neighbors Turned Unused Buildings into a Thriving Community Hub, by Christa Hillstrom (Yes! Magazine)
As rents rise and independent businesses in Minneapolis lose their leases to large national chains, a first-of-its-kind co-op found a solution.
… The building wasn’t held by absentee landlords or faraway developers, but by around 200 local people who owned the property collectively. They’re part of the Northeast Investment Cooperative (NEIC), a first-of-its-kind co-op in the United States that pools members’ money to invest in commercial real estate. They share profits, decision-making, and the community rewards of having, among other things, locally owned shops they want in their neighborhood.
The background:
In Minneapolis, like in many cities around the country, rising real estate demand meant independent stores were gradually replaced by bank branches, phone retailers, and upscale restaurants. From 2014 to 2016, commercial rent rose by 8 percent—more than four times the rate of inflation.
Nationwide, speculation-fueled rent increases are far outpacing the ability of small businesses to profit in sales from the growth, according to a report from the Institute for Local Self-Reliance (ILSR), a Minneapolis-based think tank. The result is that many businesses lose their leases to large national chains, whose brands give them leverage in rent negotiations.
“Too often, what we are seeing is that local businesses and people are bringing neighborhoods back, and then the value that is created by them collectively is being siphoned off by a small number of investors who don’t live in the neighborhood,” said Stacy Mitchell, co-director of the ILSR, pointing to the “loss of control” many Americans feel over their neighborhoods’ waning affordability and increasing sense of sameness. “Owning commercial real estate is the ultimate way to guard against being at the mercy of those forces.”
Before NEIC formed, the group behind it—some of whom knew each other through the local food co-op—wanted to get a foothold in the real estate market before this happened to their neighborhood. Board member Leslie Watson, one of the cooperative’s architects, said they would bat ideas around when they ran into each other at neighborhood classes and meetings: What if they headed off rising costs by buying up houses together? Or maybe commercial real estate? And what if they did it as an official cooperative?
By late 2011, they settled on an investment model that didn’t exist anywhere else in the country.
