Successful Small Business Boosts Real Estate Development. Local small businesses can play an essential role in the economy by fostering partnerships that benefit both parties and lead to new opportunities, employment, and business innovations. A flourishing local economy, which in turn boosts property values, is often the result of a robust small-company sector.
When towns and cities do well economically, investors flock there, and much of that money goes toward building and renovating more things. We will explore how small businesses contribute to local economies and influence real estate values.
How Small Businesses Impact Real Estate Values
According to a seminal 2011 American Express OPEN Independent Retail Index study, some cities’ real estate markets may benefit from thriving small companies. Over fourteen years, the study indicated that property values in areas with robust independent enterprises outperformed citywide markets by fifty percent. Even though this research isn’t new, it confirms what companies and towns have long suspected: Small businesses are the engine that keeps a community going. Higher real estate values and more local jobs are two benefits of cities that encourage small stores. Researchers intended to show how these benefits manifest in these communities.
Keep in mind that there is a cyclical nature to the connection between real estate and SMBs. Small enterprises are king in the real estate market, worth a trillion dollars. No other industry of its scale in the United States can claim that. Consequently, local real estate typically follows the downturn of small firms.
For example, a monthly National Housing Report by RE/Max states that property sales in Charlotte, North Carolina, a boom area in the south, have recently dropped. For companies involved in real estate, that has repercussions. Also, according to a recent AP story, kitchen renovation companies are seeing far shorter wait lists and are being hired for less demanding jobs. Were You Informed? One of two licenses—that of a sales agent or a broker—is usually required to work in real estate. A real estate broker is an authorized business manager, while a sales agent must collaborate with a broker.
More Ways Small Businesses Boost Local Communities
There are numerous ways in which small enterprises contribute to thriving local economies, including increasing real estate prices and boosting the economy overall. Some ways in which local communities benefit from small enterprises are as follows.
- Small businesses boost employment: According to the Small Business Administration (SBA), small businesses generated 12.9 million new jobs during the last 25 years – two out of every three jobs added to the economy. Similarly, the American Express report found that small, independently owned businesses supported an average of more than 1,800 jobs at independent retailers, restaurants, and bars.
- Small businesses keep money local: Small companies typically source product materials and other purchases locally, keeping money within the community.
- Small businesses keep taxes local: Small business revenue translates into taxes that support local education, infrastructure, first responders, and more.
- Small businesses help build community identity: To survive, small businesses are often unique and stand out from the competition, adding innovation and creativity to a community. They can boost tourism by appealing to specific demographics and becoming community fixtures.
- Small businesses can directly help communities: Community involvement can boost a company’s profile while positively impacting the area. For example, small businesses can build a brand image by sponsoring local events and charities, providing discounts and free services, running workshops, and welcoming customer feedback.
- Small businesses help the local environment: Small, local companies usually shop in previously existing buildings instead of creating new space. They source local materials, causing less of an environmental impact. Their customers are likely local and can reach the business by walking or taking a short drive.
Small Businesses have an Optimistic Outlook
There was a dramatic increase in innovation and competitiveness, and small firms were the engine that drove both, accounting for two-thirds of the net new jobs produced between 1998 and 2014 (SBA Office of Advocacy). However, their overall contribution to GDP fell from 48% to 44%. The start of the financial crisis in the late 2000s was a significant factor in this downturn.
Every part of society, even tiny companies, was hit hard by the pandemic. Nonetheless, it might have sparked a renaissance of small businesses. According to a study from the White House, there was a slight increase in the number of small enterprises in the initial year of the epidemic. Many small enterprises got their start using emergency relief cash. In addition, the number of new enterprises increased by 25% in 2020, as the US Chamber of Commerce reported.
As of 2022, the U.S. is home to around 32 million small enterprises, as reported by the SBA. These companies support nearly half of all American jobs (61 million people).
Small Businesses Remain Crucial
Local and national economies rely heavily on small enterprises, which are essential in both. Whether it’s increasing property values or fostering local prosperity, small businesses have the power to make a significant impact when they integrate into a community.
