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Little Village Businesses Hang Tough in Tight Economy

For years, the storefronts and small businesses lining West 26th Street have sustained Chicago’s Little Village neighborhood through thick economic times and thin.

Residents and shoppers throughout the region are so drawn to the Mexican commercial strip between Sacramento and Kostner avenues that it once had the reputation of being second only to Michigan Avenue’s Magnificent Mile in terms of retail dollars spent.

Enlace Chicago, the NCP lead agency in Little Village, is hoping to revitalize 26th Street in the wake of the 2007-09 recession with more locally owned businesses like this one, rather than "low-hanging fruit" like corporate pawn shops.

Eric Young Smith

But even Little Village, or La Villita as it’s known, has not been immune to the kicks and blows of the recession. As the American economy has shifted away from large-scale manufacturing jobs, Mexican migration to the United States has slowed.

Between 2000 and 2009, the South Lawndale and Lower West Side Chicago neighborhoods witnessed a 9 percent drop in new migration, according to Rob Paral, a community development researcher who previously served as the research director at the Latino Institute in Chicago. And Census figures show that Little Village’s population declined from more than 91,000 in 2000 to just over 79,000 in 2010. Fewer people, fewer customers.

Those chinks in the retail armor have not escaped the attention of Enlace Chicago, NCP lead agency in Little Village and a community development corporation that, for the last decade, has been engaged in planning the neighborhood’s future. It recognizes 26th Street’s commercial value and is laying the groundwork for what it hopes will be a successful and prosperous future.

“We’re realizing that absent a strategic plan to invest in the creation of a local vibrant economy, we’re destined to settle for low-hanging fruit,” said Adrian Esquivel, Enlace’s economic development director.

That “low-hanging fruit” is two corporate chain pawnshops that opened this year. Some people, said Esquivel, think pawnshops pose an unsavory image for the 26th Street commercial strip.

The main thoroughfare in Little Village, 26th Street boasts more than 100 retail businesses, about 22.7 shops per square mile, higher than the city average of 14.

Eric Young Smith

Ald. Ricardo Muñoz (22nd) pointed out that while “pawnshops are a fact of life and an economic development engine,” he agreed pawnshops don’t always carry a positive presence among the business sector. Muñoz said conflicting ideas of what’s good and bad prove why having a planned community vision is important.

“Obviously, we don’t want 26th Street to be overrun by pawn shops,” said Muñoz. The alderman used the example of a moratorium on liquor licenses in Little Village, which has helped to avoid certain kinds of traffic and instead attracts complementary services and businesses.

“The neighborhood still has a good amount of buying power,” added Esquivel, “but people are leaving the neighborhood to spend their money.”

Youth, Density Buffer Business
Despite population declines, Little Village has plenty going for it. Between 2000 and 2009, the number of middle-income households (families earning more than $50,000) increased by 10 percent. The rate was double that of the City of Chicago, according to a 2009 Retail Trade Assessment by LISC MetroEdge, a national market research and assessment program.

“The business community of Little Village has not suffered the same extent as other neighborhoods,” said Joel Bookman, LISC Chicago’s director of programs, adding that Little Village’s young population and homogenous ethnic make-up have contributed to its economic resiliency.

While Little Village has lost some mom-and-pop businesses, others have sprung up to take their place.

Eric Young Smith

Additionally, the community has a strong regional draw “because it has built itself as the Mexican capital of the Midwest,” said Bookman. “It offers specific goods and a large variety of merchandise. If you need something you can pretty much find it on 26th Street.”

The 26th Street business corridor houses more than 100 businesses, or roughly 22.7 shops per square mile, according to Enlace. This is greater than the Chicago-area average, which is roughly 14 small businesses per square mile, according to the Census’ Initiative for a Competitive Inner City Analysis. This high density has also helped to maintain a better business economy, Bookman said.

Even when compared to the similarly populated Pilsen, fewer Little Village residents are suffering major rental burdens or earning below $25,000 annually, according to Social IMPACT Research Center’s analysis of the 2005-2009 American Community Survey five-year estimates program. “It has a stronger market than a lot of places,” Bookman added.

Vacancies Spurred By High Rent
New shops, however, are hardly on easy street. Obstacles beyond the vagaries of the business cycle abound. One of those obstacles is high rent.

“The fact that there are empty storefronts is more a reflection of property owners being used to getting a lot of money for renting, and many of them have refused to drop their rent to a level that is affordable in this economy,” said Mark Doyle, senior vice president community development of Second Federal Bank. “We’re not seeing a lot of foreclosures in the retail sector.”

Daniel Villareal of Villareal Real Estate concurs. “They’re silly to not lower the price,” he said. “They should be learning by now that they have to lower the price to get them rented because you’re not going to make up for that lost rent.”

Food carts remain a staple of Little Village streetscapes.

Eric Young Smith

Additionally, some store owners are struggling because they lack business educations. Many immigrant owners, for example, established successful businesses but failed to develop a succession plan. As younger generations forge their own paths, Mom and Pop are left wondering what will happen to their shops post-retirement.

Modernizing Mom and Pop
From Nov. 28 to Dec. 4, 2011, Little Village was part of Unwrap Chicago, a partnership with neighborhood businesses to encourage households to redirect $100 of their holiday spending away from chains, stimulating the local economy.

“It’s [Little Village] an amazing example of how locally owned businesses can craft a unique community,” said Suzanne Keers, co-founder and the executive director of the non-profit Local First Chicago. But locally owned businesses in Little Village have significant strides to make in technological advances.

“These businesses still need to stay modern and relevant,” Keers said. “The Internet may have created behemoths like Amazon, but at the same time it’s also created a huge opportunity for local businesses to get on the map.” One example, she added, is the review site Yelp, which has created a web presence for hundreds of small ethnic restaurants.

Little Village lost population during the 2000s but gained middle-class families, according to the U.S. Census.

Eric Young Smith

To that end, the Little Village Chamber of Commerce is planning a variety of workshops focused on professional development for small business owners and managers, with a particular emphasis on computer and technology skills.

“A lot of what we’ve learned in canvassing the areas is that a lot of these businesses don’t even have e-mail,” said Nilda Esparza, executive director of the Little Village Chamber of Commerce.

Economic, Population Changes Lead to Creative Solutions
Commercial stakeholders have highlighted the urgency to encourage a more entrepreneurial spirit in Little Village as traditional labor jobs leave the city.

“The vitality isn’t going to return like it was in 2008, not for 10 years, and that’s a guess,” said Second Federal Bank’s Mark Doyle. “Those warehouses aren’t coming back. We have to get more creative.”

Over the past year, Little Village lost roughly 1,200 industrial and manufacturing jobs as a result of downsizing or moving away from the industrial park along 31stStreet, said Bismarck Brackett, president of Urban Investment Research Corp.

“The vast majority – I’d say roughly 80 to 90 percent -- of the people employed at these businesses lived within a five-mile radius,” he said.

Since the 1980s, Mexican immigrants have also steadily migrated to suburbs like Berwyn and Cicero, where housing prices were lower. Meanwhile, the convenience of big box stores has no doubt had an impact on small shopkeepers.

“It’s a lot tougher for a little guy to make it in business nowadays,” said Mike Moreno, owner of Moreno’s Liquors. “You have grocery stores like Pete's Market and Cermak Produce and stuff like that, and they heavily cater to the Mexican community and they're much stronger, so it hurts the little guys. I think I saw more stability back then because there were more Mexicans coming into the community and they had an opportunity to become citizens or apply for citizenship than you do now with the economy.”

Community organizers hope that keeping the retail strip vital and hosting cultural events will build pride in the neighborhood's young people, leading the next generation to stay and continue 26th Street's retail success.

Eric Young Smith

And although well-established mom-and-pop businesses, like Catedral Café, have succumbed to the recession, Little Village Chamber of Commerce executive director Nilda Esparza notes that there’s no moratorium on new businesses.

“There’s a lot going on, that entrepreneurial spirit is here despite the economic climate, and businesses are opening,” said Esparza, a petite woman with a giant-sized enthusiasm for her new job. Esparza, who’s been adamant about championing a new image of the community, was hired by the LVCC just a little more than a year ago as part of a major overhaul that saw a complete shake-up of its staff.

Esparza notes that while it may seem easier to paint a gloomy picture for small businesses throughout Little Village, with dozens of shops having closed over the past few years, the densely populated ethnic neighborhood continues to have a higher buying power rate than most other Chicago communities.

In fact, it’s in the top 25 percent and has $219 million per square mile compared to Chicago’s $159.6 million per square mile average, according to LISC’s September 2011 study Little Village Trade Area Information Profile.

And in February, LVCC drafted a five to 10-year development plan during its bi-annual retreat to analyze efforts like Villapalooza (a local music festival) and other methods to encourage more retail.

A key local political initiative that has helped revitalize neighborhood economies is the Special Service Area (SSA) programs. SSA started in the early 1980s in areas that agreed to raise a levy among retail stores to seed private investment for renovations. More communities have applied for the funds over the past several years, according to Bookman.

Little Village community organizers have worked with Muñoz to use these funds to beautify the area and to invest in younger generation’s artistic endeavors, like the Villapalooza-Little Village Music Fest that premiered last September.

“These are the kids, who have that pride, who are the future entrepreneurs and business owners who are going to stay in Little Village,” Esparza said.

This story was funded by the Local Reporting Initiative, part of The Chicago Community Trust's Community News Matters program and administered by The Community Media Workshop and The Chicago Reporter.

Posted in Economic Development, Little Village


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