The Dark Side of Gentrification

Can the heart and soul of a community withstand the tides of change? In this episode, Gareth and I tackle the intricate dance of gentrification and its impact on the very essence of our neighborhoods. We trace the journey of places like East London's Hackney, where once vibrant hubs of creativity now cater to a wealthier demographic, altering the landscape and displacing the original community craftsmen. As we dissect the drivers of such transformations, we expose the undercurrents that can erode the cultural fabric of our cities, leaving listeners to ponder the true cost of progress.

But it's not all a narrative of loss and displacement. Enter the game-changing concept of ColivingDAO, where we shine a light on an alternative path to urban development. Here, residents become more than just bystanders to gentrification; they're empowered as co-owners, invested in the prosperity and identity of their neighborhood. This episode is not merely a discussion; it's a beacon of hope that showcases how inclusivity and economic growth can coexist, ensuring that the communities who built the foundation of our vibrant cities are not forgotten but flourish alongside the new. Join us for a compelling exploration of how we can all play a role in sculpting a more equitable future for urban living.

Transcript

Daniel: 0:09

Welcome everyone to another episode of ColivigDAO Insights. This is your co-host, Daniel, and I'm joined as usual today by Gareth. Hey, Dan, great to be back, great to have you here, Gareth, as well. Today we'll be talking about something very important, because the main topic today is gentrification. We hear a lot about this word. We're gonna go a little bit deeper on what it is and how it's affecting our society in a number of different ways and, in particular, we're gonna look at some cases where gentrification can actually be detrimental and can actually destroy our communities. So that's a very important topic and we'll not just stop here, but we'll show you a way to effectively address and even solve this problem, which is literally what we're doing at ColivingDAO.

Daniel: 0:56

So Gareth will be diving straight into this concept of gentrification, and let me just start with a definition of what gentrification is because, effectively, you probably know what it is already intuitively. But just to give a little bit of context, gentrification is this process where middle class, upper class gradually moves into a traditionally lower or working class area in a city and what happens is they normally displace the original residents, the original communities, because greater investments are flowing into the area and prices in the area are beginning to rise. Now, this is a definition that encompasses different dynamics, and we're gonna go more in depth. The first thing that comes to mind really is first of all, why are prices rising in the first place? So, if we're talking about people going to a new area upper class compared to what it was there before because prices are rising, because more investment is flowing, why is this happening in the first place? There can be different reasons, and how is this affecting original communities living there as well? So, gareth, what can we say about this?

Gareth: 2:12

Yeah, dan.

Gareth: 2:13

So it's a really interesting topic and we've all seen cases where we benefit from gentrification.

Gareth: 2:20

We live in London here and we see that gentrification has resulted in lots of areas that used to be quite run down and dilapidated or even dangerous to hang out in are now like great places to live and there's really nice neighborhoods in areas that were previously not very attractive places to live. And so, yeah, we recognize that there are some really good benefits from gentrification. But there's also a dark side and we want to explore the dark side in particular, different types of gentrification and different scenarios, and you raised a really key question there, dan. What is it in the first place that causes the prices in an area to rise or for the investment to start flowing in? That's a really interesting one, right? Because if you have a run down, dilapidated area that nobody wants to live in and then suddenly one day people say, actually we want to put money in this and we're going to buy these old properties and run down businesses and we're going to make them valuable, what's the trigger for that and why does that happen? That would be a really interesting one to explore.

Daniel: 3:30

Exactly so.

Daniel: 3:31

This is interesting because, let's say, on one end of the spectrum we have the type of gentrification that arises when some people simply realize that the city is expanding and there's no more space to build new homes in the center of the city.

Daniel: 3:50

So, gradually, suburban areas, they become part of the city itself, and that's a very normal process and therefore, simply due to spatial reasons, groups of people investors, developers decide okay, let's look at certain areas and see if we can make some investments with the idea of attracting upper class, attracting people that normally live in the city, to the area as well, and that's a process that again can be beneficial, can also have some downsides, but overall it's more of a process that is driven by spatial considerations. But there's another process that is very common and is that, rather than simply having to expand and not knowing where else to go, rather than there, there's many situations where community and neighborhood is intrinsically already rising in value for some dynamics that we're going to explore. And as the value rises in that particular community, that's where that spot gets identified by new developers, new investors and gradually this gentrification process appears. So it's not necessarily something arbitrary, it's actually something that happens from the bottom up, from the ground up, and therefore this has some interesting consequences. So, gareth, how does this process really happen?

Gareth: 5:21

Yeah, let's dive into that. So we're going to look at a very specific example, dan, of the Hackney warehouses in East London here, where we were in the city where we live, and this is really an interesting story because the trigger for the rise in property prices and investment inflows came because this was again a very poor area and, you know, a century and a half ago this was a scene of part of the Industrial Revolution in Britain, and so these old warehouse buildings positioned near the waterways in East London were prime property at the time and they were built for the Industrial Revolution and all the way through to the 19th century where the warehouses were used for businesses. A lot of those businesses are now gone. They were like textile businesses, they were, you know, giant fisheries, a whole range of 19th century style businesses. But as the economy changed and the global economy shifted, these warehouse businesses disappeared and became empty and dilapidated.

Gareth: 6:32

Then in the 20th century or late 20th century, very late 20th century in fact, artists saw an opportunity to move into those warehouses and use them as really cheap spaces where they could create art and live and work at low cost, and they moved in and they started creating a really vibrant artistic culture and it attracted a whole range of creatives. Then started moving in entrepreneurs, artists, people that were basically innovating and changing cultures and bringing in new energy and a bit of a vibe to that area. And they did it because it was a low cost, because these warehouses were there and sitting dilapidated and at very low cost they could be rented and used as living and working spaces a combination but still be in the city, still be close enough to the city to get access to city resources. So this is a really interesting, you know, a new community that moved in to take advantage of that opportunity for low cost living and working done.

Daniel: 7:47

Yeah, this is interesting because it's not something that only happened in Hackney. Of course, it's a great case study, great example, and we can think of multiple places where similar dynamics might have taken place. For example, when I saw what's happening in the French Riviera in South France, historically a lot of artists were living there, and the reason is obviously the first few artists go there and the more and the more, and it's great because there's a lot of opportunities and prices are affordable. As soon as prices went up and again we're discussing exactly why are going up in those particular areas where artists or creatives in general move, then it becomes harder for new artists to effectively go to same places, and so there's been a bit of a migration. When it comes to, let's say, the favorite spots for artists Right now, spain and Portugal, for example, are favored by innovators in this case.

Daniel: 8:53

So, whether it's art innovation, whether it's tech innovation as well, I know there's a lot of tech innovators communities in Portugal, for example, but certainly gradually, we can see the same pattern happening again. I mean, in Portugal, in the past few years or decades, there were more and more tech innovators moving. All of a sudden, the same things are happening Again. Prices are going up gradually. This might eventually turn into a similar dynamic where houses become more expensive and ultimately end up attracting a different type of tenants. And the underlying dynamic is that usually innovators, creatives, artists they tend to be not as wealthy as professionals that are working with quote unquote. Let's say let's call it the old system, let's call it big corporate dynamics. Let's say, in general, let's call it types of businesses multinational, big corporations, types of businesses that have become so big, utilizing past ways of growing capital and growing companies, so not necessarily in line with the latest innovations. When I say innovations, it's not only technology, of course. We're talking about multiple other types of innovation as well creativity, social innovation and so on. Gareth.

Gareth: 10:25

Yeah, exactly Dan. And to continue the story, just building on that thread of what happened in Hackney, is that the artists, the creatives, the innovators started moving in to use these low-cost warehouses and then what happened is that some of them started setting up local businesses, kind of unique places like interesting coffee shops, interesting bars, small restaurants and places to eat to service their fellow community of artists and innovators. But because they're all part of the same scene, it started to create a really unique kind of community spirit and a unique set of community businesses started to appear and then that attracts visitors from the outside. So in the case of Hackney, people from other parts of London would come to Hackney to get a part of that new community spirit, to feel it, to go and visit those businesses, look at those art exhibitions, just get immersed in that exciting, energetic new culture. And then when you have more people coming in, then the local area becomes more valuable, right?

Gareth: 11:34

So you've got these visitors coming in to experience new types of restaurants, new coffee shops, take part in and experience the music scene or the art scene that's developing and gradually becomes a cool place to go to and people start to move into the properties in that area, people with a bit more money, middle class professionals, corporate professionals with a bit more disposable income.

Gareth: 12:02

They come in because they want to soak up the atmosphere that the original artists, creatives and innovators have set up. And that is the trigger for the price rising in the local area, because now it becomes a place where people want to live and work, and not just the original artists but some other new characters with disposable income coming, and this is what causes the land prices to go up and the property prices to go up. And then the investors start looking at the warehouses, thinking, oh, these warehouses are now quite valuable. Maybe if we pull some funds together, we could buy them and convert them into new businesses to service the new people that are here. And so that's the continuation of the story. That's what happened in the next step, dan.

Daniel: 12:52

That's very interesting because that effectively answers the question that we were posing, as in, why are prices rising in the first place? Why is investment flowing into a certain area and not another area? So, again, we're seeing this is not just arbitrary. There's a very specific pattern, a specific dynamic at play, and there's a great example of the Hackney warehouses. And that there's a great example of the Hackney warehouses is really fascinating because it shows that the people that add value to certain community, people that add value to certain area in the first place, are the people that, at the end of the day, get the wrong end of the stick and they effectively are forced to move out because they can no longer afford living in the same place when prices rise and so on, and they pretty much left with nothing to show for it. So this is extremely detrimental in many ways, right, gareth?

Gareth: 13:54

Yeah, exactly, and it's quite sad. So when the prices of, when the prices of those properties go up and the developers come in and say, buy one of the warehouses, they might just knock it down completely or rip out the insides and build new apartments. But the problem with that is if they build those new apartments and the rental prices typically could be double what the original artists and creatives were paying to live in those warehouses, and so they get forced out and they have to go find somewhere else to live, and what that means is the people who created the value of the building itself by creating that really vibrant artistic community are then kicked out because they created the value in that community and local area, which is quite a sad story, and although the area itself benefits, the original community that created the value in that area has been forced to move out.

Daniel: 14:56

Yeah, and this is very eyeopening because it shows how gentrification, which, as we said, sometimes can have positive effects and make areas safer and better serviced, in many cases can have a very detrimental effect, especially when it goes against the natural inclination for humans to foster community and build connections between individuals living in the same area. And many times the focus of gentrification is being quite the opposite, is making areas look more globalized, making areas more in line with what big corporations are looking for. So more consumerism, more opportunities to extract money from certain people, as opposed to really adding value to the life of those people living there. That's what we're talking about, right?

Gareth: 15:56

Yeah, exactly. And so to complete the story and go full circle, dan, exactly what you just said. Some of these more typical businesses start to move in when they see that the value of an area goes up and this could be your sort of typical high street shops that you see in every major city, in every big town. And the problem with that is you're now having more traditional people moving in to live in the area, who you know, middle class professionals that weren't the original artists and creatives. They went to get the atmosphere and soak up some of the unique vibe of the creative kind of community that was created there and those new businesses.

Gareth: 16:40

But then you have businesses that you see everywhere moving in the typical high street chain stores and then the area kind of loses the original residents, starts to lose the original creative, innovative atmosphere and it becomes just like any other middle class, nicely built up, pleasant place to live. You know, there's nothing wrong with it, it's a really nice way to live. But the character and the innovative spirit of that community disappears and that's what people refer to when they say that the soul of these places has been taken out, because the original energy and community spirit is being replaced with something much more generic from you know that you can see in every in every other place In the city. It just becomes normal and some of those creative businesses may even move out. They may move to the next kind of interesting place to live where there is that creative, innovative spirit.

Daniel: 17:42

Yeah, so it's a bit of a shame that the unique flavor of many areas gets destroyed, and this is simply a dynamic that is dictated by the economic system that we're using. It's not people that specifically want to destroy that flavor, destroy that soul. It's people that are looking to pursue their interest, which is usually financial interest, and it's determined by the system that we're utilizing. Now the good news is, effectively, we have identified ways to address this and even, ultimately, to solve this altogether, and it's all about utilizing a system that is compatible with the current economic system but has some specific characteristics that make sure that we don't fall into the same trap over and over again. And this is pretty much what we're doing here at Coal Living in Dallas. So, gareth, do you want to describe a little bit more in depth how we're addressing this at Coal Living in Dallas and why? What we're doing at Coal Living in Dallas is effectively helping communities not only keep the original flavor, but also potentially create some new flavors as well, as society develops and more and more innovation happens.

Gareth: 19:01

Yeah, dan, so exactly, and we have a great solution at Coal Living in Dallas for exactly this kind of problem. And the problem, in a nutshell, is that the original value creators of a community in the scenario we described in the Hackney warehouses are forced to move on because of the economic system. Right, they create the value, but because of the way the current economic system works, they don't fully benefit from that value, because they need to move on when the value is realized by other investors coming in to buy the property. And so what you need to solve this problem is a new sort of economic solution that enables the original creators of the value of a community to be rewarded for the gentrification process and to take part in it instead of being kicked out. And one way to do that is by utilizing the Coal Living Dallas format. So, to take an example from the Hackney warehouses story, if artists move in and occupy a warehouse building and they create lots of amazing new initiatives, and that attracts new businesses into the area and the value goes up, as we just described, instead of a property developer coming in and buying the building and kicking the artists out, if that became a Coal Living Dallas Coal Living community, then investors could come in, invest in the community, retain the artists who are living and working there as residents. They become co-owners, because that's the way the model works. Right In the Coal Living Dallas model, residents are co-owners and they stay and they continue to add value by staying in the building.

Gareth: 20:58

But the investors are able to come in and invest in the Coal Living Dallas community and obtain a financial return, which is the whole reason that they're coming in. And the most amazing part of this is that, by the investment coming in, those warehouses and buildings can actually be maintained and refurbished. They could be improved and gentrified effectively gentrified without kicking the original value creators out. And so you get the best of both worlds. You get a scenario where the buildings are improving, the residents who created the original value are getting a share in the wealth and the decision-making that goes with being in that community, and the investors are getting a financial return as well.

Gareth: 21:47

And so what you have is, instead of breaking the economic cycle and forcing new people in and forcing the old people out, you're creating a new sort of cycle that is more like a helix, where, instead of being a circular process of creation and destruction, you have a helix of continuous creation, but more people and more actors are able to come in and contribute to the process, and what that would mean is you don't lose the spirit and the soul in that local community, you maintain the creative innovation and the whole thing could potentially be turbocharged, because now you're talking about wealth and value creation and keeping the soul and the character in the local area and attracting more and more investment. At the same time and that's pretty amazing Obviously I'm painting a best case scenario, but co-living DAO enables at least enables the possibility of the best case scenario to occur Dan.

Daniel: 22:48

Absolutely, and even if the best case scenario doesn't materialize, we're still envisioning a major, major improvement versus the existing conditions because, at the end of the day, what we're doing really is we're making sure that we're remunerating types of capital that are not strictly financial. So, adding value to a space, adding value to a neighborhood, a community, is definitely something that needs to be remunerated, and when we talk about remuneration, again, it's not only financial. It's a number of things that we're including rights as well. So making sure that people that add value they have rights, so that they don't see all the value being taken away and being forced to effectively leave their homes. So this is something that is critical to the type of project that we're building here at Co-living DAO. By recognizing that having money is not the only way to really exchange value, we are literally creating the infrastructure for a fear society, where not only people can live in fear conditions, but what's really beneficial to society in general is that we're not losing the character, we're not losing the soul of all these communities that, effectively, are being destroyed. I think it's not very interesting if you look at the prospect of having a world where every neighborhood looks the same in the next 50 years. Is it an interesting place to live or is it a little bit boring, a little bit soulless, just to keep the same analogy Whereas if we utilize the system, we're not talking about preventing innovation quite the opposite, actually.

Daniel: 24:36

Surely, the character of a neighborhood is going to evolve. It's not going to stay the same. But how about, rather than just destroying what was there before and bring something dry and globalized and not unique at all, how about we combine two things, we merge that and at the end of the day, we can. In neighborhoods, there are a melting pot of innovation, a melting pot of corporation why not? That can play a role in there as well. And ultimately we would see situations where the original flavor is preserved and maybe mixed with different flavors as well.

Daniel: 25:20

So at the end of the day, every character becomes unique. So, rather than destroying rather than preserving, exactly as it is, stopping innovation, we could see different neighborhoods with a lot of different benefits. And you know what? If a place becomes safer, if life becomes more comfortable in a certain neighborhood, it's certainly an advantage. What we're looking at here is how can we get all the benefits of gentrification without the major downsides, which are very destructive for our society, and that's exactly the type of the future that we're envisioning and that we're working towards, gareth.

Gareth: 26:02

Yeah, beautifully described, dan. You described something that makes me recall a phrase called unity and diversity, which basically means that you can have diverse communities and neighborhoods, or even countries and cities, each with their own very unique flavor and local culture, but also where you get those economic benefits and you get the benefits of kind of shared belief systems but different cultures and communities flourishing in those belief systems and values. And so, instead of having this kind of bland corporate face of the world where every neighborhood looks the same for the sake of economic, pure financial economic development, you have a world where you have very unique communities and very unique neighborhoods and flavors, but they also contribute to the economic system and generate financial wealth. So you get the best of both worlds effectively. And so we see co-living DAL communities as a enabler to help that world come into existence and to strengthen it. So you can, you know, wander into the hackney of the future and, instead of it becoming gradually replaced by the same old bland high street shops, what you have is a very vibrant, artistic, entrepreneurial, creative community that is becoming wealthier in both a financial and non-financial sense. And you literally feel it when you go into those neighborhoods, where you have a different personality, a different soul, and you can take part in it and see how it develops and becomes stronger and stronger and stronger.

Gareth: 27:49

And then, if you you know you want a neighborhood with a different flavor, you can go over to West London or North London and those communities and areas will be very different if you're looking for something different. But they're all thriving. They're not competing against each other. One kind of culture and neighborhood identity isn't displacing another one. It's not becoming blandified or blandification is another possibly way to describe gentrification in some cases. But you have this really interesting personality development of these different places and they all thrive together because they're different, but they're also also able to build financial wealth, which is the key. You know, we don't need to trade off one against the other. We can move away from these zero sum tradeoffs, and so that's really exciting to see that we can contribute to that future world and contribute to maintaining the value in communities Instead of having gentrification destroy communities. Gentrification actually enables ads and empowers communities.

Daniel: 28:57

Absolutely, and that's a great word, by the way.

Daniel: 29:00

Blandification yes, it's possible to really get the best of this process and leverage the aspects where gentrification can enhance some aspects of a new community and, at the same time, preserving all the advantages that were there before.

Daniel: 29:18

So, yes, it's great that we can effectively envision one way to move forward as a new paradigm, and that's why we are so happy with this opportunity to make this possible here at Kohl-Livindau and for everyone who's listening. If you feel aligned with this vision, if you also feel that the world would look a lot better once we really get to this point, once we really address the downsize of gentrification, make sure that we can get the benefits and find a way to really steer the world towards a combination of a lot of unique characters, rather than just having this blandification process in place, preserving every type of capital, including financial as well, as part of a mix of different capitals the society values, then we have the perfect recipe. So if you feel aligned with that, make sure you stick around. Feel free to subscribe to the podcast as well. We're back every week, gareth. Any final thoughts before we wrap this up?

Gareth: 30:26

Say no to blandification and yes to unique communities and thriving local characters. That's me, Dan.

Daniel: 30:35

Brilliant. Thank you so much, gareth, and thanks everyone else for being here and, as usual, we'll be back with you next week.