The type of new business development in your area can be indicative of the future property value changes. If you are starting to see pawnshops, liquor and gun stores, massage parlors, and payday loan offices spring up, it might be time to toss in the towel and sell before the neighborhood goes south.
Conversely, if you are starting to see more parks being built, seedy buildings being torn down and replaced with cultural landmarks, movie theatres, upscale restaurants, and artistic monuments – you might be looking at an area on the rise.
Times Square in Manhattan was once one of the sketchiest neighborhoods in New York City. Littered with adult shops, peep shows, and unsavory characters, property values were depressed. Alphabet City had a violent reputation, and the cheap bars and pawnshops that peppered the streets helped to keep the price of real estate low. The same can be said for the meatpacking district, and industrial areas of the city. Smells, sounds and sordid smoke from factories kept the well-heeled neighbors away.
Now, Alphabet City is a center of cool. Imagine that Avenue D was once known as Avenue Death. Once a place of litter and gangs, today it is host to franchise extensions such as Westville, Fonda, and the Citizens Brigade Theatre. Likewise, the Lower East Side and, in particular, the Bowery, which has been referred to as skid row for much of the 20th century, has seen gentrification, making it a very desirable area with upscale boutiques and trendy restaurants.
There is a natural progression to gentrification, and a smart investor can follow the patterns. When thrift stores, antique shops and pizza parlors start getting replaced with clothing boutiques and trendy bars, expect luxury real estate to be on the heels of a neighborhood in flux. The same can be said for the opposite effect. When liquor stores, pawn shops, and payday loan stores begin creeping into a once affluent area, you can be sure that your investment may be in a tailspin. Keeping an eye on the businesses in your area is an important precursor to changes on the horizon.
New York hasn’t always been the utopian paradise that it is today. It used to be a notoriously dangerous place. Most of the crime and homelessness in Manhattan was resolved in Giuliani’s heyday with a simple theory: Repair broken windows, and paint over graffiti as soon as it happens. People act differently in an unkempt environment. They perpetuate the disorder.
When things are nice, and people seem to care, it has a snowball effect. The vandalism actually stops, and crime goes down. Property values soar. But it only takes one small slip – like a payday loan store opening its doors across the street from your apartment – to reverse the trend from your favor.