This Chicago-Based Initiative Is Combining Grants and Investments to Cultivate Black Ownership
/
Chicago TREND employees celebrate with the new owners of local UPS franchise in a shopping center purchased in one of TREND's recent deals. TREND also helped make it possible for the new owners to become UPS franchisees.
Black Lives Matter activist Kimberly Jones had this response to critics of property damage done in the wake of George Floyd’s murder: “When they say, ‘Why do you burn down your own neighborhood?’ It’s not ours! We don’t own anything!”
Today, a unique collaboration of funders is supporting an effort to do something tangible about that. Chicago TREND and its associated entities have raised $10 million and purchased five shopping centers in two states via partnerships that include 334 small-dollar local community investors. The initiative has attracted the backing of 21 foundations and other entities including MacArthur, Kresge and JPMorgan Chase. In addition to improving both the services that local shopping centers are providing to low- and moderate-income, minority neighborhoods and the economic opportunities they afford, the work of TREND and its backers is simple: ensuring that local residents have the chance to own something in their neighborhood.
One of the starkest illustrations of this country’s racial inequality is also one of the simplest to understand: Just follow the money. It’s quickly obvious who does, and who does not, have an ownership stake in America. Some of the figures involved are fairly well known. In 2022, for example, the net worth of the typical Black household was $44,900, or more than $240,000 less than the median wealth of white households. Only 43.4% of Black households owned their homes vs. 72.1% of white families.
Disparities of wealth and ownership are throughlines in every one of our society’s traditional indicators of financial wellbeing. They also extend to a figure that most people have never thought about: ownership of the retail shopping centers that are cornerstones of many of our country’s communities. Granted, few American households, regardless of their demographic, own nonresidential commercial real estate of any kind, including shopping centers: Just 8% of white families vs. 3% of Black households have a share of this kind of wealth. But white households that do own a stake in noncommercial residential real estate have assets valued at nearly 10 times those held by Black households, or $34,000 vs. just $3,600.
A simple idea that requires a lot of moving parts
This small, but vital, subset of real estate is what Chicago TREND is targeting using a mix of impact investing, grants and more traditional real estate investment dollars. The effort is also opening the door to people who have never had a chance of owning the shopping centers in their neighborhoods — local folks with between $1,000 and $2,000 to invest.
Very little is simple in the world of commercial real estate, but here’s the easiest explanation of how it all works. In order to comply with all of the laws and regulations involved, there are three entities at work: Chicago TREND is a benefit, or “B” corporation, which exists both to make a return on its investment and to benefit local communities. There is also a community development corporation, TREND CDC, which was formed as a 501(c)(3) in 2019. Participating funders make impact investments in Chicago TREND while cutting a separate check for roughly 5 to 10% of the impact investment amount in the form of a grant to the TREND CDC. A third entity, TREND Fund, was created as a general partnership in 2023. All three entities were created by founder Lyneir Richardson, an expert with 30 years of experience in commercial real estate.
Richardson explained that Chicago TREND’s role is to handle the many business details involved in purchasing, upgrading and operating the shopping centers, including tasks like hiring leasing professionals to find tenants and property management firms to collect rents and do maintenance.
TREND CDC uses the grants it receives to support the work involved in reaching out to local community members, educating them about the investment opportunity and working with those individuals who choose to invest. Richardson said TREND CDC also obtains grants and launches community programs around the shopping centers; for example, youth conflict resolution and crime prevention programs.
The TREND Fund is the vehicle that provides Chicago TREND with the money for the down payments, due diligence, and ultimately the bulk of the equity capital required to purchase the shopping centers.
All of these complexities aside, the main goal of all three entities, and the foundations and businesses that support them, is a simple one — making it possible for residents to own a piece of one of their community’s assets. Of course, overseeing that process isn’t exactly easy.
“I have a brother who is a traditional private equity guy,” Richardson said. “When I closed our first deal with the community investors, he said to me, ‘Congratulations, you raised $330,000 from 130 community investors. And his next comment was, ‘I feel sorry for you how you're gonna manage that.’”
Richardson thinks that the extra effort is worth it. “It would be easy for me just to go to five wealthy guys and say this is a financial proposition, as opposed to 130 people with $2,274,” which is the average amount that community members have each invested so far. “But the $2,274 is more important to me, and the community investors are more important than the five wealthy guys because those 130 people know the neighborhood and invest with the intent of making the neighborhood better, which is our strategy.”
Chicago TREND has purchased five shopping centers in two states, Chicago and Maryland, so far. Richardson eventually hopes to raise at least $20 million and to recruit 1,000+ community residents to purchase properties in the South, Midwest and Mid-Atlantic states.
Richardson said that the TREND effort targets shopping centers in transitioning communities, neighborhoods that are either potentially in decline or in danger of gentrification forcing local residents out. In the first case, revitalizing a local shopping center can prevent a neighborhood’s decline. In the second, having an ownership stake means that local residents have some rights if and when outside developers come sniffing around.
Allison Clark, MacArthur Foundation associate director for impact investments, described Chicago TREND as an “exciting model.” In addition to providing community members with ownership stakes in properties, “this was also a fund that was now focusing both on helping acquire and revitalize community shopping centers, and retaining and repositioning those properties to be able to provide better, more meaningful services and retail experiences to residents,” she said. Instead of the ubiquitous liquor and cigarette stores that are prevalent in so many Black neighborhoods, Richardson explained, TREND-purchased properties have provided space to businesses like a UPS franchisee, a dentist and a physical therapy business in one of its properties.
The bottom line, though, is community ownership of community property — even in the form of small shares of the local shopping center. Or, as one woman told Richardson, “I have lived in this community for over 43 years, I called it my own. But I've never actually owned anything until I invested my $2,000 in this shopping center project.”
