A new look finds wealth in inner city
Sydney Bradford doesn’t own a car, so when she needs to shop, she jumps on a bus. Then she gets on another one, and another.
“To get to the nearest pharmacy, I take three buses,” she said.
Bradford’s odyssey reflects the scarcity of shopping choices in her neighborhood near Watts, where there are plenty of mom-and-pop stores, but not the large retail chains that attract Bradford.
“Everybody in the neighborhood is not destitute, homeless and on drugs,” said Bradford, a garrulous woman of 55 who works as a detox technician at a drug and alcohol rehabilitation clinic. “People have money, they just have to go out of the neighborhood.”
A new study reaches the same conclusion. The report by Social Compact, a Washington-based nonprofit organization, says that annual income in Watts, Boyle Heights and seven other neighborhoods in South and East Los Angeles is about $1.9 billion more than the U.S. census has estimated and that 82,000 more people live there than the census has counted.
Social Compact produced the study, titled “L.A. Drilldown,” to gauge the consumer spending potential that retailers have long neglected.
“Retailers have said up to now there isn’t a market there,” said John Talmage, director of Social Compact. “I’m telling you -- you have a market.”
Social Compact culled government and private databases to estimate the spending potential of nine neighborhoods. In addition to Watts and Boyle Heights, the study focused on the Hyde Park, West Adams, Crenshaw/Baldwin Village, Vernon Central, Central City East, Jefferson Park and Leimert Park areas of Los Angeles.
These communities have long gotten by without many big grocery stores or major retail chains. Shoppers such as Bradford complain of having to travel far for basic goods, thus spending their money far from where they live.
Retailers and developers have shied away from the inner city for various reasons, including blight, lack of support from local government and perceptions -- some unfounded -- about crime and urban unrest, said Greg Stoffel, a shopping-center consultant based in Orange County.
Added to that, he said, retailers “have had a plethora of sites with great demographics, great income, presented to them for a lot of years. Any site that has been deemed marginal in terms of its potential has been relegated to the back burner.”
Reinforcing retailers’ perceptions was the census data, which many relied upon to make decisions on whether to invest in inner-city areas, said Aubrey Avery, a Los Angeles district manager for TJ Maxx and former urban real estate director for Gap Inc., who has worked in retail for 30 years.
“The census never, ever captures the truth of diverse communities,” Avery said.
Indeed, some of the neighborhoods Social Compact studied are among the most impoverished in L.A. Yet so many working people are crammed into them, the study says, that what’s called income density -- annual income earned per acre -- is four times higher in these areas than for the city as a whole: $350,000 a year per acre on average, compared with $91,000 per acre citywide.
Social Compact figures the neighborhoods’ average household income is $46,000 -- $9,000 more than the census estimate in 2000. All told, the neighborhoods have 438,000 residents by Social Compact’s calculations, compared with 356,000 according to the census count.
“People have historically broad-brushed South Los Angeles,” said Michael Jones, president of the Crenshaw Chamber of Commerce. “We invite people to take a different look.”
In the last three years, Social Compact -- which is funded by financial service institutions including State Farm Insurance and the Consumer Bankers Assn. -- has tried to take a different look at inner cities around the country.
It has completed studies in Oakland, Santa Ana, Detroit, Houston, Cincinnati, Miami and Washington, D.C. In March, it finished a study of San Francisco, and hopes to study Fresno and San Diego in the next year.
For the nine Los Angeles neighborhoods, Social Compact mined 38 databases, looking at water and electricity consumption, credit ratings, IRS returns, U.S. Postal Service addresses, title and mortgage payments, building permits and tax assessments, among others.
First American Real Estate Information Services Inc. gave Social Compact access to its real estate database, with information on mortgages for every property in the country.
“You can’t expect businesses to make decisions without current information that makes sense,” said Joseph Reppert, First American’s vice chairman and chairman of Social Compact’s board of trustees.
To estimate households per acre, Social Compact examined building permits, tax assessor records and more to compile all the addresses. Next came checks of water hookups to determine how many units at each address were occupied, Talmage said.
With that household count, the organization used credit bureau data to figure average household income, he said. Then it approximated the size of each area’s informal economy, using a measurement it developed that applies various indicators to a neighborhood: the number of check-cashing companies, number of foreign-born people, percentage of families who pay in cash as opposed to credit, and others.
Combining the two, Social Compact came up with estimates of income density: Leimert Park came in at $458,020 earned annually per acre, for instance, and Boyle Heights at $326,606.
Among the study’s conclusions is that residents of the nine areas spend a combined $113 million on groceries outside their neighborhoods each year, and that most have to travel more than half a mile to shop at a full-service grocer. Five of the neighborhoods have only one full-service grocer per 10,000 households, and all nine have twice as many check-cashing stores and pawnshops as banks. Almost half the residents have no credit record; an estimated 12% of the neighborhoods’ income is unreported.
City officials say they will use Social Compact’s figures to lobby retailers to build in the neighborhoods.
The study shows “what a lot of us know but were never able to effectively communicate,” said Cecilia Estolano, director of the Community Redevelopment Agency. “It was hard to get the story across without more refined data.”
In the past, consumer spending power in suburbs and affluent urban areas was studied extensively but lower-income inner cities hardly at all, said Robert Weissbourd, a Chicago-based economic development expert who specializes in inner cities.
What’s more, retailers had been basing their investment decisions mostly on census population and median-income estimates, Weissbourd said. Census data are collected every 10 years. But many in the industry view census information as rough and less accurate over time, and especially inaccurate for cities with large undocumented immigrant populations such as Los Angeles.
The inner city is denser and often has a large under-the-table sector and a wider variation in incomes that median estimates of the sort the census produces tend to hide, Weissbourd said.
The good news, Weissbourd said, is that this is starting to change. Many inner cities across the United States are seeing unprecedented retail investment.
In Los Angeles, Wal-Mart Stores Inc. and Macy’s Inc., for example, both have stores on Crenshaw Boulevard. Major shopping centers have opened in Compton and the Florence-Firestone neighborhood. Meanwhile, grocery chain Fresh & Easy Neighborhood Market, owned by British retail giant Tesco, has opened a store in Compton, broken ground on another in South Los Angeles and is looking to open others.
“Retailers are starting to recognize this emerging specialized market and starting to demand better metrics on” the inner city, Weissbourd said.