I saw this meme which as an attack on these trendy burger joints, you know the one. The gentrified ones, “we do things a little different here”, 11 dollars for mac and cheese, repurposed furniture for chairs and tables, motivational words on the walls etc. and its followed by “If you see this on your street expect your rent to rise up”
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I dont get it. How does it make rent go up?
In: 1
The restaurants don’t per se, it’s just a sign of gentrification.
As the restaurants move on, so do the coffee shops. Old, dilapidated buildings are overhauled and renovated making the neighborhood nicer.
Nicer neighborhoods attract more affluent residents. More residents means more demand for living space.
Limited living space means rents go up.
Trendy restaurants mean that more people come from outside the neighborhood to eat. The neighborhood becomes popular, so people figure out “hey, this is a cool place to live in”. So there’s a rise in demand for apartments in the neighborhood, so landlords feel free to raise the rent.
Gentrification generally leads to increased rents as competition for available housing increases. One indicator of gentrification is hip new eating spots – restaurants need customers, and it costs a lot to open a restaurant – those who open them tend to be well aware of demographic changes happening in and around a neighborhood. So if you start to see new trendy restaurants open in a seemingly depressed area, that’s a pretty good sign that the neighborhood is gentrifying and more and more people will seek to live there. More people chasing the same amount of housing drives up rent, all else being equal. It’s simple supply and demand.
Gentrified businesses popping up naturally signals that your area is becoming gentrified, hence its more expensive to live there due to higher demand for property and not enough supply. The demand being from richer people means they’re willing to pay more and rent goes up. The businesses aren’t the cause of the rent going up. They’re just a good indicator of gentrification, which will cause rent to go up.
Correlation is not causation
Rent doesn’t go up because of the burger restaurant,
The restaurant moved in because rent went up. Restaurants want to be where people have disposable income
Such businesses attract wealthier clientele who are willing to pay $18 for a burger instead of $10. Such people want to live in areas with businesses they patronize are located, causing more wealthy people to look at such areas. increased demand raises rents. Developers rehabbing units to rent/sell to such potential new residents increases prices. New development in the area will skew toward the higher end/luxury market and set new price ceilings against which other units get benchmarked.
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