Are Business School Neighborhoods Becoming More Gentrified?

When universities are found in downtown urban areas, gentrification most often follows. It almost seems inevitable since universities bring in more individuals with higher education, draw in more money, and increase new businesses. But what does the rapid increase of gentrification statistics mean for the business school students looking to start their career in a new area?

What Is Gentrification?

First, we need to look at what gentrification is. In simple terms, it’s the influx of more affluent residents moving into urbanized neighborhoods. At the outset, it may sound good, but it can be controversial.

Gentrification may improve the financial quality of a neighborhood, but it can also force the relocation of current residents and businesses due to increasing costs. Often, the process of gentrification also shifts a neighborhood’s racial and ethnic composition, as well as the average household income. This can lead to community displacement for lower-income families in gentrified areas, some of which often live in the area for several generations.

However, there is a grey area. Gentrification happens when a location becomes increasingly attractive. At that point, more high-income individuals move into the area bringing in investments in the community and leading to improved infrastructure and economic development.

What Causes Gentrification?

According to a recent comprehensive review of gentrification completed by researchers at UC Berkeley and UCLA, gentrification most often occurs when more public transportation is available. People are more attracted to transit hubs because they allow more privileged groups to trade car commutes for transit and signal a large-scale commitment to neighborhood upgrading, which, in turn, leads to increased employment opportunities.

Another spur to gentrification is education. Quality schools, universities, colleges, and medical centers tend to shape gentrification. The substantial federal support that public universities receive brings money into neighborhoods through many means including housing and housing subsidies for faculty and staff. A CityLab study revealed that universities and other academic institutions are key to attracting the creative class, creating more market demand and political pressure for better amenities, schools, and other services. 

Analyzing University Neighborhood Gentrification Statistics

Since universities have such an impact on gentrification, we thought we’d take a look at what areas and schools have been most affected. While gentrification is not something most urban areas should aspire for, it happens, and it’s important to know where it’s occurring the most.

To find out, we looked at a recent study by RentCafe of the most gentrified areas in the U.S. The study took a look at the 2000 Census and the 2016 American Community Survey to see the changes that took place over a decade and a half across 1,000 U.S. ZIP codes. The study found that there are easy ways to quantify gentrification statistics when looking at median home value, median household income, and the population that holds a bachelor’s or higher degree.

Based on the results of the study, we analyzed the top five MetroMBA universities in gentrified areas.

1. University of Southern California

Located less than five miles away from ZIP code 90014 in Los Angeles, USC Marshall is just on the edge of the most gentrified area in the U.S. Over the last 16 years, this area has witnessed:

• A 707 percent increase in home values
• A 95 percent increase in median household income
• And an 857 percent increase in people holding bachelors or higher degrees

So, while some at USC might be fighting gentrification, it may not be working. Just last year, USC opened up a brand-new $700 million USC Village with a Target Express, Trader Joe’s, and 15 restaurants, transforming the surrounding neighborhood. And even though as part of the development USC provided $20 million for construction of off-site subsidized housing, there are still concerns.

“Across the street, land values are going to increase,” Joe Donlin, Associate Director of Strategic Actions for a Just Economy, told KPCC. “We know the landlords are going to rent at higher levels of rent.”

2. Howard University

Located in Washington, D.C. Zip Code 20001, Howard University’s campus is located directly in the second most gentrified area in the U.S. Over 16 years, the area has witnessed:

• A 207 percent increase in home values
• A 163 percent increase in median household income
• And a 212 percent increase in people holding bachelors or higher degrees

The gentrification statistics of the Howard University area hasn’t gone unnoticed. According to NPR, there has been a drastic change:

“The area, located just a couple of miles north of Capitol Hill, was once working-class and black. But as hundreds of new residents move to D.C. each month, more non-black residents move into Howard’s neighborhood. And as property values rise, the university is trying to capitalize on the hot real estate market.”

3. University of Houston — Downtown

Located just steps away from zip code 77003, The University of Houston campus is located near the third most gentrified area in the U.S. In the last decade and a half, the area has seen:

• A 284 percent increase in home values
• A 71 percent increase in median household income
• And a 443 percent increase in people holding bachelors or higher degrees

Much of the gentrification can be laid at the university’s feet as its student housing footprint has expanded into surrounding neighborhoods over the last decades. According to the Houston Chronicle, “In the portion of the neighborhood closest to downtown, which includes Emancipation Park, median home values increased 176 percent between 2000 and 2013, according to an analysis of census estimates conducted by Governing.”

4. University of Pennsylvania

The Wharton School at UPenn is less than five miles outside the fourth most gentrified neighborhood in the country: zip code 19123. This area, over the last 16 years, has noticed:

• A 203 percent increase in home values
• A 95 percent increase in median household income
• And a 230 percent increase in people holding bachelors or higher degrees.

In fact, UPenn has had a complicated history with gentrification over the years, dubbed Penntrification by some. The problem, according to The Daily Pennsylvania, is that in West Philadelphia Penn students’ demand for housing is displacing low-income families. There have even been protests criticizing the university for causing gentrification in the area.

5. Texas Christian University

Fort Worth, TX, contains the sixth most gentrified area in the U.S.; just two miles away from Texas Christian University (TCU). Over 16 years, the area has witnessed:

• A 323 percent increase in home values
• A 103 percent increase in median household income
• And a 122 percent increase in people holding bachelors or higher degrees

While Fort Worth’s growth has brought new life to the city’s urban core, it’s also sky-rocketed property values. In particular, the areas around TCU are growing quickly. The university recently completed a $100 million renovation for its football stadium—just five years after its last overhaul, which reportedly cost $164 million.

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