The economic impacts of real estate development are seen in both the development process as well as in the new economic activity generated by a real estate asset once it is occupied. However, concerned with the promise of financial return, private developers do not often decide to pursue a project based on the potential for existing residents to benefit from the economic impacts. In the absence of private developers, community development financial institutions (CDFIs) and nonprofits can step up to leverage commercial real estate development as a form of economic development in distressed neighborhoods. The development of the Kent Corner buildings by Self-Help and the revitalization of the Lakewood Shopping Center by the Scrap Exchange are two examples of how unconventional nonprofit developers can create economic impact for the communities they serve.

What are the lessons learned from this story?

Nonprofits can be transformative economic development actors. The economic impacts of real estate development are seen in both the development process as well as in the new economic activity generated by a real estate asset once it is occupied. Concerned with the promise of financial return, private developers often do not decide to pursue a project based on the potential for existing residents to benefit from those economic impacts, let alone the degree to which those impacts are equitably shared. In the absence of private developers, community development financial institutions (CDFIs) and nonprofits can step up to leverage commercial real estate development as a form of economic development in distressed neighborhoods. The development of the Kent Corner building by Self-Help and the revitalization of the Lakewood Shopping Center by the Scrap Exchange are two examples of how unconventional nonprofit developers can create economic impact for the communities they serve, and act as first movers in markets where private developers are not investing.

Work with strategic partners to amplify mutually beneficial outcomes. The success of both real estate development projects is a result of strong partnerships with external organizations. Both Kent Corner and the Lakewood Shopping Center are in close proximity to Duke University, giving it a vested interest in the sites and making it a willing partner in real estate development. The university provided an initial land assembly loan to Self-Help for the Kent Corner project and a $1 million interest-free loan to the Scrap Exchange for the Reuse Arts District. Beyond financial support, Duke also agreed to pre-lease office space in Kent Corner for a long term at a market rental rate. Duke’s willingness to becoming the anchor tenant was critical to Self-Help’s ability to lease retail space to the Durham Co-op Market at a below-market rate, thus supporting the kind of community-serving retail that the West End neighborhood desired.
At the Lakewood Shopping Center, The Scrap Exchange partners with area organizations that help individuals with barriers to employment join the workforce. The redevelopment project and the many business opportunities it creates allows a platform for the Scrap Exchange and other mission driven organizations to meet community needs.

Transformative projects take time. Self-Help first started working in the West End neighborhood in 2009, with a focus on responding to community interests in affordable housing creation. As they worked on affordable housing with partner non-profits, they actively participated in numerous community conversations within the neighborhood about what residents wanted, and eventually saw an economic development opportunity that they were well suited to address. The success of the Kent Corner development lies on the foundation of the community engagement and pre-development process that occurred over years. This kind of timeline is often not possible for a private developer and demonstrates again why a nonprofit is well positioned to take the first step in what a private developer might consider a new or difficult market.