FROM ANNIKA LITTLE, MANAGING DIRECTOR, ASSET FUNDERS NETWORK
AND MUNEER KARCHER-RAMOS, PROGRAM DIRECTOR, VIBRANT & EQUITABLE COMMUNITIES, THE MCKNIGHT FOUNDATION

FEBRUARY 2025

AFN Short Take is a blog series highlighting insights and perspectives from recent AFN programming events.

A new wave of innovators is transforming commercial real estate ownership, creating pathways for community wealth building. Here’s how philanthropy can help scale these promising models.

Commercial real estate represents one of the most significant drivers of wealth creation in America, yet it remains largely concentrated in the hands of a privileged few. According to a Brookings Institution analysis of the 2019 Survey of Consumer Finances, just 1% of U.S. households control 81% of commercial real estate assets, perpetuating and exacerbating long-standing patterns of economic inequality and neighborhood disinvestment. This concentration of ownership not only limits wealth-building opportunities for most Americans but also affects the very fabric of communities, influencing everything from local business development and housing affordability to neighborhood stability and economic resilience.

Insights from a National Convening on Inclusive Commercial Real Estate

On January 30, more than 300 leaders from philanthropy, government, and financial institutions gathered for a webinar hosted by the Aspen Institute’s Financial Security Program (FSP) and the Asset Funders Network (AFN) to explore investment approaches that democratize ownership of commercial real estate and how philanthropy can help scale emerging models.

The discussion featured four community innovators from FSP’s inaugural Wealth Innovation Cohort who are leading inclusively owned commercial real estate projects across the country:

“The view is that local residents, by having an ownership stake, will patronize, protect, and respect the assets in a different way. As commercial real estate owners, we get to hire professionals and contractors to decide how the property will be occupied, how it will be maintained and managed, and that, over time, as the property improves, it will change the perceptions and trajectories of those neighborhoods, reducing crime, and increasing property values without people who live there needing to move out.”

Lyneir Richardson, CEO, The Chicago TREND Corporation

Their groundbreaking work, recently documented in a new primer and four case studies published by Aspen FSP, demonstrates unique approaches to creating wealth-building opportunities through commercial real estate for community members traditionally sidelined from such investments. For example:

  • Partners in Equity provides equity investments and subordinated debt ($100,000-$1 million) to help small business owners become property owners, with PIE’s investment plus the entrepreneur’s contribution covering 20-25% of the purchase price and enabling access to traditional financing for the remainder, including SBA, conventional, or CDFI loans.
  • LocalCode Kansas City, working with the national nonprofit organization LocalCode, transforms underutilized properties into community-led mixed-use developments using regenerative development principles, leveraging blended capital stacks (including public incentives, philanthropy, impact investment, and low-interest debt) with a goal of $1 billion in community-owned real estate.
  • Chicago TREND Corporation combines traditional shopping center financing with crowdfunded community investment, directing $11.8 million in equity capital and grants toward revitalizing urban retail properties while enabling 380 residents to invest (averaging $2,270 each) in a $36 million portfolio across Chicago and Baltimore.
  • Community Investment Trust offers risk-protected, local stock offerings where residents invest $10-100 monthly in local commercial property, supported by financial education. Their pilot property in East Portland, initially valued at $1.2M and now worth $2.15M, has delivered 7% average annual dividends to 350+ resident investors, with 40% of the capital stack provided by impact investors at concessionary rates (2-4%) to enable community ownership.

By focusing on neighborhood-serving commercial spaces, these projects do more than create individual wealth; they ensure that as properties appreciate, the benefits flow to community members rather than outside investors. This innovative financing approach demonstrates how relatively small amounts of catalytic capital can transform commercial real estate from a driver of displacement into a tool for community empowerment.

The Catalytic Role of Philanthropy

Inclusive commercial real estate ownership offers multiple entry points for philanthropic engagement, regardless of a foundation’s size or focus. Whether a foundation prioritizes closing the racial wealth gap, promoting local control of business assets, supporting community development, fostering small business growth, or democratizing ownership more broadly, inclusive commercial real estate ownership programs can advance these goals. As more foundations across the country recognize these alignment opportunities, they’re finding ways to support this work through various channels:

Strategic Capital Deployment
  • Offer program-related investments to fill market gaps and catalyze additional financing through strategic partnerships.
  • Make direct equity investments at below-market/concessionary returns to enable community-level market-rate returns.
  • Provide loan guarantees to tip challenging projects into viability, particularly in high interest rate environments where a small guarantee can unlock traditional financing.
  • Support CDFIs and community lenders to leverage their local expertise and financing tools – from first mortgages to tax credits – while helping bridge equity gaps in otherwise viable deals.
  • Provide grants to support pre-development costs (architectural plans, engineering studies, environmental assessments, legal work) and technical assistance to prepare residents for commercial real estate ownership.
Ecosystem Building
  • Convene local stakeholders across sectors – from municipal leaders to financial institutions – to align priorities and build momentum for inclusive ownership.
  • Fund research that builds the evidence base for inclusive ownership models and helps set community development agendas.
  • Strengthen community leadership through educational programs, investment readiness training, and ongoing operational support.
  • Amplify success stories through foundation communications channels to attract additional investment and encourage model replication.
A Compelling Invitation for Place-Based Philanthropy

Inclusively owned commercial real estate offers a profound opportunity for place-based grantmaking. Regional foundations, like McKnight Foundation, focusing within Minnesota, and networks like AFN, whose strength lies in the collective impact of its regional chapters, are uniquely positioned to understand local markets and build the relationships needed to support inclusive ownership models. They can serve as bridges between national innovations and local implementation, adapting proven models to specific community contexts while leveraging partnerships across municipal governments, financial institutions, CDFIs, community organizations, impact investors, and local business leaders, each bringing distinct expertise and resources to these initiatives.

“What’s the risk here? The risk here is that these communities get displaced, and this pattern of increasing wealth inequality gets even worse than it is today, which is pretty atrocious. When you look at risk, there are a lot of lenses on it. Communities often get penalized because of the circumstances that they were born into. We believe strongly in the capacity of the people in the communities where we’re working. When they have an opportunity to own a building, that building will be successful. When somebody in the community has an opportunity to do the development, they’ll be successful. This investment opportunity for the people around the country who care about this issue is perhaps the most catalytic way you can help support a community to build its resilience, wealth, and well-being.”

Jeff Mendelsohn, Founder, LocalCode

The innovators paint a compelling picture of what success could look like if these models achieve scale. “Ten years from now, we hope to see all of our funds in the multiple of $100 million, demonstrating viability, and producing alpha,” envisions Wilson Lester. “Because what we want Main Street private equity to understand is that Main Street and community is where this equity should reside and can reside.”

For John Haines, success would mean “thousands of community members being able to say, ‘We own this,’ about vital commercial assets in their neighborhoods.” He continues, “This really is catalytic to inclusive economic development in a way that we didn’t even anticipate. It’s not about the little piece of real estate. It’s about the ownership and economic development that it catalyzes.”

While these innovative models represent a fraction of the current commercial real estate market, they demonstrate that with the right structures and support, commercial real estate can become a tool for individual and community wealth rather than a driver of displacement and disparities. By bringing together philanthropic capital and resources, financial institutions, and community leadership, these approaches offer a promising path toward equitable wealth creation.

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This article is based on insights shared during a recent webinar hosted by the Aspen Institute’s Financial Security Program in collaboration with the Asset Funders Network.

Additional Resources:

Commercial Real Estate and Inclusive Ownership: Perspective for Funders, AFN
4 Models for Investing in Inclusively Owned Commercial Real Estate, Aspen Institute FSP
Investing in Inclusively Owned Commercial Real Estate, Aspen Institute FSP
Commercial Community Ownership as a Strategy for Just Development, Local Initiatives Support Cooperation
Exploring Community Land Ownership: An Annotated Bibliography, Center for Community Investment