Linking Small Business Support and Commercial Vacant Property Reuse in Ohio
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This document discusses commercial property vacancies and small business creation in Ohio. It notes that Ohio has a commercial vacancy rate of over 36% and 162,478 vacant commercial properties according to the USPS. New business creation in Ohio dropped 47.9% between 1978 and 2011. The document proposes addressing high vacancy rates and low business growth by linking commercial property reuse to small business support, and provides examples from Minnesota and Michigan. It poses framing questions about replicating this model in Ohio communities, what programs currently exist to support it, what new programs or practices are possible, and what partners are required.
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Linking Small Business Support and Commercial Vacant Property Reuse in Ohio
- 1. L A V E A B R A C H M A N E X E C U T I V E D I R E C T O R G R E A T E R O H I O P O L I C Y C E N T E R N A T E C O F F M A N E X E C U T I V E D I R E C T O R O H I O C D C A S S O C I A T I O N F E B . 3 , 2 0 1 5 R O U N D T A B L E
- 3. A SNAPSHOT OF COMMERCIAL PROPERTY VACANCIES Ohio Stats - Commercial vacancy rate: over 36% Number of commercial vacant properties according to USPS: 162,478
- 4. COMMERCIAL VACANCY IN OHIO
- 5. COMMERCIAL VACANCY IN OHIO
- 6. BUSINESS CREATION IN OHIO Ohio: 47.9 percent drop in new business creation between 1978 and 2011 Source: “Declining Business Dynamism in the United States: A Look at States and Metros.” Brookings Institution. May 2014.
- 7. Source: “Good News and Bad News on Small Business Lending in 2014.” Federal Reserve Bank of Cleveland. January 2015. Data source: Federal Deposit Insurance Corporation.
- 8. COMBINED CHALLENGE & SOLUTIONS Addressing both high vacancy rates and small business growth challenge Could that be a game changer in our communities, particularly in stabilizing neighborhoods with potential for regrowth Operationalizing new programs or models that build on existing programs and leverage local capacity
- 9. MODELS FOR LINKING PROPERTY REUSE & SMALL BUSINESS SUPPORT • Neighborhood Development Center, St. Paul, MN • ProsperUS, Detroit, MI The Midtown Global Market, which was a vacant Sears building redeveloped by the Neighborhood Development Center into a public market and business incubator for local entrepreneurs. ProsperUS Detroit provides micro-enterprise support in low-income immigrant and minority neighborhoods in Detroit.
- 10. LINKING SMALL BUSINESS SUPPORT & COMMERCIAL VACANT PROPERTY REUSE IN OHIO’S COMMUNITIES FRAMING QUESTIONS: 1. Could this model be replicated in Ohio? 2. If so, what would it look like, and where might it be replicated? 3. What current resources or programs exist in Ohio to support this model, and what is needed? 4. What new programs/practices are possible, and what partners or organizations are required? 5. What are the barriers, and what are the opportunities?
- 11. Lavea Brachman, Executive Director, Greater Ohio Policy Center lbrachman@greaterohio.org
Editor's Notes
- Welcome to this statewide, cross-sector dialogue about practices, policies, and resources to further align small business growth with vacant property reuse in communities throughout Ohio. Introduction: framing the challenges, bringing available properties and small businesses together for economic growth in Ohio’s cities and regions.
- The Roundtable will convene this selected group to more proactively identify and implement possible practices and policy solutions to link small business development and vacant property reuse in Ohio. We are joined by two out-of-state experts with practical on-the-ground experience. Mihailo Temali, Executive Director of the Neighborhood Development Center (NDC) in Saint Paul, MN, will present their unique approach that involves training local entrepreneurs and redeveloping commercial vacant properties where their new businesses can locate. Kimberly Faison, Director of ProsperUS Detroit, will offer insight into how they are adopting the NDC model in Detroit by concentrating micro-enterprise development in low-income immigrant and minority neighborhoods. This Roundtable is intended to promote discussion about the merits of this model, relevant existing programs and practices in Ohio, and efforts needed to connect small business growth and commercial revitalization in neighborhoods throughout the state.
- These numbers are exceedingly high – compare to largest US cities
- Map of commercial vacancy Commercial vacant properties are not only in legacy cities – they are spread throughout regions
- Map of commercial vacancy Commercial vacant properties are not only in legacy cities – they are spread throughout regions
- Fully 99 percent of Ohio businesses have fewer than 100 employees – and though they’re small, they still provide 60 percent of the jobs. Microenterprises (businesses that have less than 5 employees) and capital of not more than $35,000. (Nationally: 47.2% drop in new business creation) – persistent, national decline in business dynamism over the last few decades Business creation essential for economic growth and job creation In Ohio, we need support for start-ups and small businesses, and we need to locate them here as they become successful. According to a recent survey by the Federal Reserve Bank of Cleveland: 9% of small business respondents cited the lack of credit availability as a top business challenge; 11% cited difficulty managing business including lack of financial management guidance; and 16% cited uneven cash flow. Even more difficult for low income and immigrant populations to get credit and maintain cash flow. See also: Cle Fed article on decline in small business lending - https://www.clevelandfed.org/Newsroom%20and%20Events/Publications/Community%20Development%20Briefs/Briefs/Good%20News%20and%20Bad%20News%20on%20Small%20Business%20Lending%20in%202014.aspx
- A recently released report from the Federal Reserve Bank of Cleveland shows that while small business growth is improving, it still lags large business growth and has not reached the pre-Great Recession levels. While large business loans have soared to record levels, small business lending is losing ground Using bank loans under $1 million as a proxy for small business lending, we can estimate the impact of the recession on small business credit. Figure 1 charts bank lending to businesses during the past 10 years. The data show that the volume of small loans, those under $1 million, dropped significantly between 2008 and 2012, and has barely recovered. Small business loans now stand 17 percent below the peak reached prior to the recession. While small commercial and industrial loans grew 3.4 percent over the past year, this modest improvement does not provide strong assurances about the health of lending in this space. In contrast, lending to larger businesses (loans greater than $1 million) bounced back quickly and loans outstanding are now more than 24 percent higher than pre-recession levels. The report further states that A healthy small business sector is important to economic growth New and small firms serve an important function in our economy. Small businesses account for nearly half of private sector output and employment in the U.S. In addition, small firms – led by new small firms – have posted the highest net job creation rates going back to the 1970s. Coming out of the most recent recession, however, job creation by small businesses has lagged, and the new business formation rate continues to fall. While it is not clear that these trends are driven by weaker borrowing or limited access to loans, it is evident that businesses need adequate credit to succeed and grow. As such, policy makers should not lose sight of the trends related to small business credit, even with the recent positive reports showing improvements.
- The Midtown Global Market, which was a vacant Sears building redeveloped by the Neighborhood Development Center into a public market and business incubator for local entrepreneurs in St. Paul, Minneapolis.
- This Roundtable is intended to promote discussion about the merits of this model, relevant existing programs and practices in Ohio, and efforts needed for a potential longer-term effort that would connect small business growth and commercial revitalization throughout the state.