A common misnomer spread around the African-American community today is the “buy the block” mantra. According to “buy the block” advocates, acquiring commercial real estate or rental properties is a path to owning our “base” to build black-owned businesses and provide jobs to the local community.

Our analysis show acquiring real estate in divested areas may not be the panacea or even a contributing factor to establishing black urban economic empowerment. There are too many external factors based on structured inequality against African-Americans where physical assets like real estate will become more of a commodity if not a liability if a “buy the block” strategy is pursued. 

Understanding Fiscal Inequality

There has been an unchallenged assumption among a segment of African-Americans where equality can be achieved by “silver rights” through obtaining financial gains or physical assets. The assertion is if African-Americans obtain millionaire status, they would be respected by the greater American society by succeeding at capitalism. 

The flaw with capitalism-chasing “silver rights” among African-Americans is their lack of understanding of value. Currency is the representation of value and in a system of inequality, African-Americans and other groups will always be de-valued by the majoritarian society. Which explains why there is pay inequality at the workplace and equal fair price offers on negotiated assets such as cars and homes when African-Americans are the ones purchasing and buying. 

This means even if African-Americans successfully “buy the block” it does not mean African-American owned property will have value to others who do not perceive African-Americans in a positive way. The concept of “net worth” is also a misnomer as history shown when African-Americans have to liquidate assets into cash, they will not receive the fair value amount compared to other groups. 

Numerous Negative Conditions

There are also structural systems in place designed to create economic inequality in urban communities. For example, divestment where investors refuse to invest in African-American communities or remove any existing investments to force economic degradation. Another strategy is increase taxes or subject commercial districts to regulations that cuts into profit margins to stress a commercial property to fiscally collapse due to unaffordable maintenance.

External and nearby economic events can affect real estate properties. Events such as nearby violent crime, fires and gas explosions or water burst can affect the value of a real estate property. Vacancies nearby can also cascade into less commercial foot traffic taking down the entire block in valuation. It is important to understand there are many factors out of a commercial real estate owner control to determine if physical property can attract business or the whole area suffers from blight as a result. 

Business Models Matter

What we realize is the business models matter, not the buildings when it comes to establishing economic empowerment in black communities. It is critical to establish the correct business models to promote local fiscalism and money cycled throughout the local community. No commercial business district can thrive without a sustainable and solid business models that complement and facilitation transactions from one business model to the next.  

The main driver of economic activity is transactions, not structures. Transactions is the transfer of value between a customer money and a business model products and services. In the 21st century, transactions can occur without a building or even a commercial district using mobile payments. So the concept of transaction spaces transcend the outdated concept of a Main Street buildings with shops to open. 

Transaction spaces do not require buildings and can be anywhere such as a park, a converted lot, an event rental hall where the focus is exchange of value and transactions. In addition, inventory can be stored remotely and delivered to complete settlement of transactions which is the true driver of economic activity.  

Autonomous and Commoditized

Real estate in general is moving from an investment to a commodity as new mixed-use structures begin to emerge as the new real estate model. New structures around the world focus more on creating high density rental units for residential and commercial areas near places of employment. These mixed-use structures are usually owned by mega-conglomerates and real estate investment trusts that are global and expansive. As more and more of these structures begin to consolidate mega spaces for places of employment near residential/mixed-use, single-homes will find themselves alienated and isolated from the shift of economic concentration into high-density urban settings. 

Another emerging trend cannot be ignored is automation – real estate is becoming more and more automated in terms of boarding new tenants, e-signature of leases, automated payment reminders, household maintenance and repairs and more services, eliminated the need for human resources or a full staff to manage properties. With both the high-density real estate model build by conglomerates and emergence of automation, we are looking at real estate become more of a commoditized asset owned by the few and powerful in the near future. It will be easier for conglomerates to distress smaller real estate owners than acquire their properties and this trend is already occurring in places like New York and San Francisco. 

Economic Empowerment is a State

It is important to view economic empowerment not as things but a state. Economic Empowerment is a threshold event where transactional activity is at a volume to sustain the cost of doing business and expand business operations. With that said, what is most important is establishing business models, not buying buildings to develop an economic empowerment strategy. 

The ADOS Digerati movement is focused on what business models can be established in urban communities that will contribute to an ecosystem of transactional activity healthy enough to grow and sustain vibrant communities providing a quality of life. Less emphasis will be given to the actual purchase of any physical real estate and focus on more controllable areas such as supply/demand optimization in a community. 

Most important, people makes up a community, not the buildings. When the mindset of people understands the importance of establishing local fiscalism and respect their own community of neighbors is when a community can actually flourish. The “buy the block” is a totally dumb mantra only a short-sighted African-American hip-hop hustle millennial would actually believe works in the 21st century. 

The real solution is to focus on the business models and the transactions.