In recent years, the presence of luxury apartment complexes in University of Minnesota neighborhoods has risen, which doesn’t always bode well for local business.

The boom of development brings in its wake added property values, high rental costs and pressure on local small businesses. This, along with other problems — like scarce parking — has sparked discussion among area business owners and officials.

In Dinkytown, the most direct consequence of development is added rent some small businesses struggle to pay, said Randal Gast, Dinkytown Business Alliance president and owner of Qdoba Mexican Eats.

“That same space that was $20 a square foot five years ago might now be $30,” said Gast. “That might be the tipping point that you can’t make any money anymore.”

Many Dinkytown business owners fear the area may end up like Stadium Village, which has already seen many of its small businesses replaced by new student housing and chain restaurants in recent years.

“A lot of the locally-owned businesses are gone and most of the businesses that are coming in are regional players,” said Stadium Village Commercial Association Representative Chris Ferguson. “It’s difficult given the rental rates … it’s tough for smaller operators to survive.”

Pat Weinberg, the owner of Espresso Expose in Stadium Village — before it closed last month to make room for a new 27-story apartment complex — said that Stadium Village’s development over the years was ‘devastating’ to his business.

Weinberg said it’s tough to compete with chains like Starbucks because they draw potential customers and can afford the higher rent caused by development.

Gast said another problem associated with the development in Dinkytown is the loss of parking spaces as various lots get repurposed for student housing developments.

“[Not many people] come to Dinkytown for lunch anymore because the assumption is that there’s no place to park,” he said.

Pete Jacobson of Land’s End Pasty Company said reduced parking is one of the most difficult challenges of doing business in Dinkytown.

Many argue that preserving Dinkytown’s history is essential for its survival and gives local businesses a unique advantage.

“Dinkytown is a destination-location for people and if it loses its character, I think the advantage for business starts to diminish because then all you’ll have left is the students, and their market interests are narrower than society as a whole,” said James Sander of Kafe 421.

Kristen Eide-Tollefson, the original owner of Book House and member of Preserve Historic Dinkytown said she was shocked and disappointed when she learned of the newly-proposed 16-story apartment development in the middle of Dinkytown.

Eide-Tollefson said promises that new development will bring more customers often fall through, adding developers can be hostile towards small businesses. “It’s been disturbing to hear the developers speak about how incompatible small business is with their business model.”

Ward 3 City Council Member Jacob Frey, who helped secure Dinkytown as a historic district, said the area can grow and still retain its ma-and-pop shops.

“I think there are ways where you can activate unused parcels and space while preserving the historic nature and give a bump to the small and local businesses,” Frey said.

Still, many local business owners worry they won’t be able to stay open if the trend continues.

“Dinkytown has always been a mix of things,” said Eide-Tollefson. “But when you have people who come in and just say small business is incompatible with their business model that continues to be a serious concern.”