Is Free Rent Enough to Jumpstart a Sleepy Commercial District?
For decades, about five blocks of the South Avondale neighborhood of Birmingham, Alabama, was all but vacant. Once a small, thriving cultural district on the border of affluent sections of the city's Southside, South Avondale's business district had experienced a stunning decline in recent decades thanks to "white flight," population loss, and the closing of industrial businesses that manufactured goods such as cotton and bricks.
A 2010 photo shows construction at the building that's now home to the Avondale Brewing Company, via Flickr user Dystopos
So when stimulus money became available for "shovel ready" projects in Birmingham, residents and city leaders thought of South Avondale's business district. Out of more than $20 million in federal stimulus bonds allocated for streets and park renovations in Birmingham, $3 million was put toward expanding a Central Park-modeled public recreation area on the land where the zoo once sat. Plans for new walkways and baseball fields were proposed along with a new amphitheater and concession area.
It was easy for local entrepreneurs to see the potential of a blank slate for new businesses in the neighborhood bordering the park. South Avondale is literally on the other side of the railroad tracks from Birmingham’s Central City, but it’s easily accessible to Southside neighborhoods such as Lakeview, Crestwood, and Forest Park, known as some of the wealthiest in the city.
Photos courtesy Avondale Brewing Company.
Coby Lake and his brother, Hunter, took action. They snapped up property along South Avondale’s main drag. They built a brewery — one of only a handful in Alabama built since the state’s antiquated alcohol laws were changed in recent years. And with an innovative contest to give one new business owner six months of free rent in one of their vacant storefronts, the Lakes are now being credited with helping to transform South Avondale's business district into a thriving cultural center once again.
Could their free rent plan serve as a model for other neighborhoods in decline?
Home Sweet Alabama
Coby and Hunter are from Tuscaloosa, about an hour’s drive southwest of Birmingham, where the University of Alabama’s Crimson Tide, their alma mater, seems to seep into just about everything.
Coby had an interest in real estate after college, so he moved to thriving Houston, hoping to succeed as a house flipper.
He joined a We Buy Ugly Houses franchise for "a year or so." Then "business, women, and friends" brought him to South Avondale about three years ago.
He and his brother started a real estate business in Birmingham. They bought a number of vacant buildings in South Avondale. And, on the side, they pursued their true passion: beer brewing.
Until 2009, beer with an alcohol content of more than six percent was illegal in Alabama. And until 2011, breweries in Alabama weren’t allowed to sell their beer in a tap room. But a recent legislative push has overhauled those laws. When those laws began to loosen, the Lakes opened Avondale Brewing Company in one of the vacant buildings they had purchased.
But it sat essentially alone on the block. And the Lakes owned at least one storefront they couldn't fill.
"We wanted to make things go a little faster," Coby says.
So they hatched a plan.
The Lakes went to Main Street Birmingham, a public-private urban redevelopment organization that partners with the city. The Lakes, along with Elizabeth Barbaree-Tasker of Main Street Birmingham and some marketing pros, got to thinking: What attracts new, independent businesses to a neighborhood? The answer was simple, they thought: Free rent.
And they aren’t the only ones to come to this conclusion. In Cities Back from the Edge: New Life for Downtown by Roberta Brandes Gratz and Norman Mintz, the authors advocate for free rent as a way to court small businesses on the edge of breaking into public.
In a section titled "Free Rent as Economic Development," they write:
When stores fill up and customer traffic increases, new activity is generated.People return to Main Street for more than the errand. Each element feeds and reinforces the other. A critical mass of economic activity evolves, and the downtown whole becomes stronger than the sum of its parts.
And that’s what the Lakes and Main Street Birmingham hoped to inspire — economic activity.
They set up a contest. Unrelated to the North American political movement of the same name (but more than happy to capitalize on its notoriety), they unleashed “Occupy Avondale.” They offered six months of free rent on a 3.5-year lease to operate in a ground-level storefront owned by the Lakes, across the street from their brewery.
The response, Barbaree-Tasker says, was overwhelming.
"We've been trying lots of interventions in districts across the city," she says. "But this is by far the most successful one." They received 75 applications for businesses. Though only one was chosen — Freshfully, a grocery store designed for local farmers to sell their food and goods — additional businesses have since gravitated to South Avondale.
A barbecue restaurant recently opened along with a mercantile shop and a pub; an art gallery, a third bar, and a sandwich shop are all set to open soon, as well.
"Avondale is becoming a retail destination," Barbaree-Tasker says. Birmingham is "a fairly conservative city, so there’s not as much entrepreneurial growth in the retail or restaurant mix. So this is definitely something new." Of course, offering free rent to lure new businesses isn’t limited to South Avondale.
There are similar offers in places like Cleveland and an Indiana town called Lawrenceburg. And it's by no means universal that free rent offers revitalize neighborhoods. A free rent offer in Buffalo has done mediocre at best, for example, and it’s rare that free rent alone can bring new tenants. South Avondale had plenty of help from the federal stimulus, for one, along with help from a new set of alcohol laws.
Robert Simons, an urban studies professor at Cleveland State University specializing in real estate development and public economics, says a plan such as Occupy Avondale can easily work to jump start a community on the brink of revitalization.
"For some businesses, especially when they’re starved for cash, six months of free rent is great," he says. "It can make all the difference."
But the main consideration in a district such as South Avondale, he says, is that if a developer — or other interested parties, such as the city or Main Street Birmingham in this case — wants to redevelop a certain district, they need to create a buzz.
"And if you’re trying to create momentum in a rehab district, you gotta get critical mass in there," he says. "Otherwise, what have you got? You’ve got an empty lot or an empty building," he says. "And no one wants that."