The real estate boom in Boston is noticeable in recent reports. According to Zillow, Bostons' median home value is $455,500, 6.5 percent up over the past year. The listing website predicts that its home values will increase by 3.4 percent within next year. In another report by Boston Business Journal, Boston home prices increased by 4.7 percent compared to January 2014, according to the S&P/Case-Shiller study.
But along with the real estate boom in Boston, come higher rents and property taxes, driving some businesses away, reports Boston Globe. The outlet notes that even longtime businesses known by locals in the area are affected.
Take the situation of Debbie Lewis, 59 years old, who spent about half of her life managing a Newbury upscale American café famed for its lobster and cobb salads. Tourists would flock during the busy days of summer into her cafe and willingly partake its specialty.
But now, due to the recent events, Lewis is dreading her birthday on the 30th of April. As soon as her candles are blown out, her Newbury café, which opened in 1986 will also cease to exist.
"I'm really heartsick. This has pretty much been my home for years. Everything I have done revolves around 29 [Newbury café]. It's like watching a family member die," says Lewis.
Lewis may just be one victim of sweeping real estate growth in Boston which resulted to higher rents and property taxes.
The phenomenon affected much of the restaurants and retailers in the the Back Bay area. Along Newbury and Boylston streets alone, residential and commercial owners have to pay an average tax bill that ballooned to as much as 18.4 percent, against a 5.7 percent citywide tax, acording to the City of Boston, as noted by Boston Globe.
In Lewis' case, she just gives 10 percent of her monthly sales to the owner, D.L. Saunders Real Estate Corp. Saunders said that it only accounts for "about half of what he could get at current market rates," which Lewis could not afford. Saunders on the other hand, must look for a tenant who could pay because he also needs to pay the property taxes.
So what will happen to Newbury if this continues? The president of Back Bay Association, Meg Mainzer-Cohen, said, "It's a place where small independent businesses are increasingly going to be priced out. It's going to change the character of Newbury and Boylston."
There could also be another cause related to the closing of such businesses. Based on RealtyTrac's report, Boston is among the 45 unaffordable cities where home price appreciation outpaces wage hike in the period 2012 to 2014, reported by RISMedia.
