ARTS DISTRICT — Over 20,000 people had walked through the doors of The Heart Department by July 2022. The BIPOC community center and rental venue had helped raise tens of thousands of dollars for local fundraisers; organized over 200 events; and hosted 40 organizations for programming including self defense classes, a discussion on feminism in Iran, and more.
But just as they were hitting their stride, The Heart Department’s building was put up for sale on short notice, even though founder Shelley Bruce and her team had planned to purchase it within a year’s time.
“It created a sense of emergency and unpredictability that made it hard to function,” she says. “What if we were given a 10-month timeframe? There’s a lot of ways that [the entire building’s] rent could have been met with institutional support if we were given a fair time frame.”
After only thirteen months housed in their Arts District building, their dream location, The Heart Department closed its doors on September 30.
Black business owners and entrepreneurs have been disproportionately affected by the recent spate of shop closures in LA County. Among small businesses, entrepreneurship rates are highest among Black and Latino adults — 35 percent and 27 percent, respectively — compared with 15 percent of white adults. However, business closures are increasing, up 5.2% in 2023 from 2.9% in 2019. And here in LA County, the pandemic resulted in the most business closures in the United States, resulting in a large number of Black-owned shops and endeavors that have either closed or sit on the brink of closure just after a year of opening.
Ritu Mahajan, who works with Public Counsel, a public interest law firm specializing in civil rights and racial and economic justice, emphasizes the deleterious effects that speculative real estate has had on Angeleno entrepreneurs like Bruce. Those hit by the capital-driven phenomenon are those without generational capital themselves.
“The commercial real estate market has just changed so much so these places that people used to be able to afford now cannot because their landlords don’t have the same motivation to rent to them at the lower rents,” says Mahajan. “They just want more money and have an investor who wants to pay top dollar for big business, which will take out smaller businesses. There are more reasons for them to turn over the property to those developers.”
Black Image Center
Black Image Center — which serves as a hub for photography lessons, mentorship, financial aid, and peer-to-peer feedback for Black image makers — experienced the dreaded force of speculative real estate first-hand. While searching for a physical space where they could continue cultivating Black storytellers and image makers, Kalena Yiaueki and Maya Mansour scoured West Adams, Leimert Park, and other historically Black neighborhoods. But they quickly realized that they had already been priced out by buzzy corporations like Google, Sweetgreen, and The RealReal.
“Even though the landlords don’t have tenants yet, they were holding out and waiting for [corporations], so when we showed up as a bunch of young Black and brown people without a big name behind us, they didn’t know why they would rent to us,” says Mansour.
Black Image Center ultimately found a photography space in Culver City’s Arts District in May 2022. But after only a year in operation, the group was struggling to make ends meet again. In their social media posts, Black Image Center urged Angelenos for monetary help, noting that “the world has moved away from the urgent wave of support for the Black community that we saw in 2020.”
“To see this very intense sort of interest and then [to have] that very quick fall is very heartbreaking,” says Yiaueki. “But people move on if it doesn’t directly affect them. Where are those corporations who made those intense drastic pledges for the betterment of Black lives in the $50 million range? It’s virtue signaling, and it’s very expected.”
Yiaueki and her co-founders secured initial corporate funding at the height of the Black Lives Matter movement in June 2020; shoemaker Converse was one of their earliest investors, donating a large enough sum of money to help Black Image Center rent their current property. But after their short-term partnership ended in early 2023, Black Image Center had to search for funds again.
After leaning on crowdsourced funds throughout the summer, Black Image Center secured funding in September 2023 from technology company Snap, Inc. — an extension of a grant awarded by LA 2050. This helps them to keep their doors open and work on a future incubator program to nurture emerging Black photographers, at least for now.
Still, grants are incredibly challenging to secure for many new Black businesses. To keep her coffee shop Lazy Rose Cafe alive since its opening in March 2022, owner Erdavria Simpson applied to 52 grants, a few of which were organized by LA County, food company Oatly’s Big Ideas Grant, and non-profit Regarding Her’s yearly Re:Her Academy program. Simpson was discouraged by the lack of feedback from organizations as well as what she called the “cliquey” nature of well-backed restaurants in the city.
“I love seeing other businesses around me succeed, but when it’s the same businesses, that makes me wonder, ‘How do I get into this club?’” says Simpson. “That’s definitely something we saw with the grants going to the same two coffee shops. I’m very happy for them, but I would love to know how to get on that level.”
Precarious lease agreements further compound the lack of peer support. Lazy Rose Cafe ultimately had to close after only a year in business because of the accumulation of costs such as building a set of staircases and installing flooring. None of these costs came with any concessions from the landlord, despite Simpson experiencing delays from improving upon the space.
Bruce, who observed other Black-owned businesses experience lack of tenant protections in commercial leases and succumb to losing their spaces, believes that entrepreneurs like herself are subject to “violent” lease agreements.
“When you continually double and triple the rent on new businesses that are less than a year old like mine, or businesses that have been there for 10 or 20 years, you displace business owners and a multitude of communities,” she says. “The commercial real estate market is violent because of this expectation that you can be in Downtown LA and thus you can be charged the same as Spotify and that should be okay.”
Nonprofit organizations like Vermont Slauson Economic Development Corporation (VSEDC), whose mission is to support small business development in low- and moderate-income South LA businesses, want more people to learn about their resources, from lending platforms to classes, in response to the factors that make gentrified areas difficult locations for young or aspiring Black entrepreneurs.
According to Quentin Strode, CEO of VSEDC, Black businesses fall hardest in the general phenomenon of LA’s short business cycles.
“If you look at LA County, we are number one or in the top ten in the country in business starts, but we’re also in the top ten in the country for business failures,” he says. “What does that tell you about people being prepared to go into business or having enough capital to get them past the first six months? That’s really why I am in this work at this point: to really figure out how to close that gap as I look at LA.”
VSEDC’s work aims to ameliorate the racist conditions within entrepreneurship that have historically disadvantaged Black businesses. Their lending services and certification preparation courses are a direct response to their target demographic’s lack of capital and education.
However, even VSEDC is in search of ways to address the power that landlords wield in commercial spaces.
“Lease agreements are tough,” says Strode, recalling one business he worked with that had to vacate after 30 years because of exorbitant rent hikes. “There are solutions, but in a lot of cases people are so busy that they aren’t looking for the solutions, or by the time they look for solutions, it’s too late. We have to be better about locating these people in our outreach.”
Public Counsel’s Mahajan is striving to build some political will, to change commercial tenant protections. Attorneys of the public interest law firm who represent street vendors and small businesses want to propose changes to tenancy laws that would enable tenants to be fairly compensated for improvements made to their spaces, receive a proper 90-to 120-day notice for any valid reason to vacate, and receive caps on common area maintenance (CAM) charges.
“There’s no protection in the law right now for commercial tenants, absolutely none,” she says. “Residential tenants have baseline protections, such as if your place is not habitable, you can stop paying rent and you can expect a certain amount of notice or certain things from your landlord. Businesses are told that they have just 30 days and their rent will increase 200%, or if they’re not wanted [in the building] anymore, they’re given a 30-day notice to move out.”
To open again
Against the odds, the Heart Department and Lazy Rose Cafe are looking to open again. Bruce and Simpson are proud of how their endeavors were embraced and welcomed by Angelenos, both longtime residents and recent transplants, in search of new cultural institutions.
“Value is not just something that can be seen on paper or in assets,” says Bruce of The Heart Department. “It should also be considered — particularly for Black folks in LA — based on their heritage and the cultural work that they are doing. Generationally, my family and my community may not represent the kind of wealth that can own many buildings downtown, but we are doing work that is expansive, extremely needed, and valuable for decades.”
The stark incongruity in commercial real estate and the instability of Black-owned businesses poses the question of how LA can move forward with new measures of success in order to achieve a truly equitable place of commerce and exchange of services. Businesses like Black Image Center and Lazy Rose Cafe, whose mission was to provide a safe space for women away from the hustle and grind of work culture, deserve more than a year in business without having to worry about capital to continue their work.
“Being an LA native, I’m most proud of having had a space in Los Angeles,” says Simpson of Lazy Rose Cafe. “To be born and raised in Los Angeles made it feel like there is still hope for someone to make it in LA and be from LA. I feel like that part of it hurts the most.”