Penny and Jack Lee, now married, grew up in the 1960s and 1970s among the thousands of people of Chinese heritage who lived in apartments lining the main stretches of Washington, D.C.’s bustling Chinatown.

“Chinatown was very bright, vibrant,” Jack Lee recalled. “All of our recreations ended up being in the alleys of Chinatown.” They felt it was a safe haven, he said.

But the neighborhood didn’t stay the same for long. First came a convention center in 1982 that displaced many in the majority Chinese community. Then, in 1997, came the MCI Center, now Capital One Arena, a few blocks from the heart of the neighborhood. These developments, as well as luxury condos, caused rents to rise and forced grocery stores and restaurants to close. They also pushed residents to move to safer and cheaper areas, Penny Lee said.

Just a few hundred people of Chinese heritage still live in the neighborhood, mostly in Section 8 apartments for lower-income residents. There are now fewer than a dozen Chinese restaurants, as well as the long-standing Chinatown gate and non-Chinese businesses with signs bearing Chinese characters. Jokingly called the “Chinatown Block,” reflecting its diminished size, what’s left of the neighborhood is mere blocks from a wealthier area that contains the U.S. Capitol and the National Mall.

Chinatowns across the nation face a similar reckoning. In major Chinatown neighborhoods, luxury development and public-use projects have altered the fabric of these historic communities, according to more than two dozen activists, residents and restaurant owners. While some argue these developments accelerate local economies, many interviewed by CNBC say they destroy the neighborhoods’ character and push out longtime residents.

Some Chinatown residents benefited from the development boom, selling properties to developers or drawing more customers from increased foot traffic. Many others, meanwhile, have been driven out by higher rents, limited parking and increasingly unsafe conditions.

The changes in Chinatowns across the country look similar, though they’re unfolding at different timelines and magnitudes. Chicago’s Chinatown, in comparison with other Chinatowns with shrinking populations, more than doubled its Chinese population between 1990 and 2020.

Cities already deeply affected by gentrification and high-end development stand as templates for how the shift may unfold elsewhere. For many, housing is the problem — and the solution.

“We can’t build our way out of the housing crisis, but we can’t get out of the housing crisis without building,” said Ener Chiu, executive vice president of community building at East Bay Asian Local Development Corporation in California, which has built 2,300 permanently affordable homes in Oakland.

In Manhattan’s Chinatown, which dates back to the late 1800s, residents and local organizations said there are two interrelated fights: one against luxury development, and another to build more affordable housing and maintain existing apartments. Some have been frustrated that money and government support have gone toward skyscrapers and not the longtime residents who still struggle to secure housing in the neighborhood.

Opponents say tall, modern buildings — such as One Manhattan Square, a 72-story residential skyscraper in nearby Two Bridges developed by Extell Development Group, which features units priced at over $1.2 million — will affect surrounding property values, the structure of neighboring buildings and the percentage of Asian residents in Chinatown.

There are also plans to develop four more towers ranging from 62 to 77 stories, each with 25% affordable housing, by Extell, JDS Development Group, and Chetrit Group.

City councilmember Christopher Marte and residents of the Lower East Side and Chinatown filed a lawsuit against the buildings’ developers and the city in October, arguing construction of the towers will create further environmental and health issues. The suit contends the developments violate the Green Amendment granting New York state residents the right to clean air.

Extell and JDS Development Group did not provide comment for this story.

Some residents have shown tentative support for the luxury buildings, saying they might make the neighborhood safer or bring in wealthier Asian residents who could boost Chinatown’s economy. Most who spoke with CNBC, however, expressed frustration over the rapid development of these megaprojects.

The Two Bridges fight is an experiment in looking out for residents’ livelihoods while “fighting against a very anti-humanity way of seeing a city,” said Alina Shen, the lead Chinatown Tenants Union organizer at grassroots community organization CAAAV: Organizing Asian Communities. “It’s a response to the fact that people who remain in Chinatown feel a deep pessimism for what’s happening and from literally being in the shadow of a ledge of a mega tower.”

The struggle with luxury developers has also involved the fight for secure housing.

Chinatown’s housing stock is “really aged,” but sparse vacant land has made creating affordable housing difficult, said Thomas Yu, executive director of Asian Americans for Equality, which has created more than 800 affordable housing units citywide. The development process for new units can take years, he said, and developers have rapidly sought out Manhattan’s Chinatown as the borough’s “last place with huge potential returns.”

Evictions, buyouts and deregulation of rent-stabilized housing have contributed to Chinatown’s population decline and illegal sublet situations, according to Yu.

Chen Yun, a tenant leader for CAAAV, said she had a landlord who for years refused to repair heating and hot water. She said she and her husband would boil pots of water at work and bring them home to bathe. They also dealt with a collapsed ceiling, she said. Yun spoke in Mandarin, translated by Shen and CAAAV communications manager Irene Hsu.

In 2005, Yun helped grow the Chinatown Tenants Union to help residents fight landlords and report faulty conditions. However, residents continue reporting similar housing issues, which Yun said has pushed some onto the streets, and more residents have mobilized to oppose developments they say could exacerbate these issues.

“No matter how beautiful or well-built these buildings are, [residents] simply can’t afford it, it’s not within their means, and these luxury buildings have nothing to do with us,” said Yun, who lost her job during the pandemic and spends much of her retirement money on rent.

Yu, of Asian Americans for Equality, said his organization is not against development but that more affordable housing should go up instead of solely market-rate buildings. Asian Americans have among the highest citywide poverty levels and have poor odds of finding secure housing, Yu said.

Some argue luxury development is eliminating affordable housing opportunities by sheer proximity, as one of Chinatown’s ZIP codes was excluded from a city loan program for low-income areas since it also included the wealthy Soho and Tribeca neighborhoods.

Some residents expressed feeling an intense divide between their local government and Chinatown — fueled in part by rezoning debates, not to mention a proposed $8.3 billion 40-story jail in the neighborhood.

Zishun Ning of the Chinatown Working Group has led protests against the proposed jail, as well as against the Museum of Chinese in America, which stands to benefit from the jail’s expansion via a $35 million government investment. Ning said the city government’s “big development” agenda has “pitted us against each other.”

The museum’s leaders said they’ve been scapegoated, as they weren’t included in development talks with the city but could not turn down the money.

For many Chinatown residents, rising rents and sparse affordable housing have left them with one choice: moving away. But challenges often follow residents, and once they resettle, some face familiar changes.

Many Chinese residents have relocated from Boston’s Chinatown to the nearby suburbs of Malden and Quincy, said Angie Liou, executive director of Boston’s Asian Community Development Corporation. Luxury buildings have opened in these suburban satellite Chinatowns as developers look to capitalize on less developed parts of the city, pushing residents further away.

In Manhattan, a woman with the surname Yang, who requested partial anonymity to preserve her privacy, said she had lived in a $1,100-per-month Chinatown apartment, which her family could no longer afford due to increasing rent. After applying for public housing through the NYC Housing Authority, she moved eight miles away in 2009 into a $400-per-month apartment in East Harlem.

“It was a hard readjustment period just because my life is even to this day still tied to Chinatown, so the train commute is an extra hour,” Yang said. She spoke in Fujianese, with translation by Ling Ren, Asian Americans For Equality’s manager of residential services.

Yang said she still goes downtown each week for doctor’s appointments and groceries. She found several other people of Chinese heritage living in her new neighborhood with whom she waits in food pantry lines, some of whom have also relocated from downtown Manhattan, she said.

Other displaced members of New York’s Chinese community have relocated to Flushing, Queens, a hotbed for condominium and affordable housing developments.

Though communities such as Flushing have long appealed to residents across many socioeconomic backgrounds, it’s recently attracted wealthier residents moving into new developments.

“One of the unique aspects of Flushing is what I call the 15-minute neighborhood, the idea that you can live, work, play, go to school, partake in open space, shop, sort of all within 15 minutes,” said Ross Moskowitz, partner at Stroock & Stroock & Lavan, who represents several developers’ projects in the neighborhood.

And as more people move in, rents go up, meaning many residents who relocated to Flushing for cheaper rent have found themselves in the same battles with developers that they fled from, according to Jo-Ann Yoo, executive director of Asian American Federation.

Many debates surrounding luxury development and affordable housing were accelerated by the pandemic, which shuttered hundreds of businesses across Chinatowns. After experiencing xenophobia and discrimination fueled by anti-Chinese sentiment during the pandemic, many people stopped coming to Chinatowns and frequenting restaurants, clothing stores and art shops. Local families were forced to restrict spending, and some businesses had to cut staff and hours.

Some businesses in Oakland have been unable to build back after looting and anti-Asian attacks on public transit caused many residents to fear going out after dark, said Evelyn Lee, former president of the board of directors at Oakland Asian Cultural Center. This has contributed to reduced pedestrian traffic in Chinatown, she said.

In Manhattan, Chinatown native David Leung, who took over Wo Hop Restaurant in 2016, remembers old-school factories making tofu and small grocery stores that recently closed. Amid rising anti-Asian sentiment and the pandemic’s harsh economic impact, Leung reduced his restaurant’s hours and watched as storefronts emptied.

“There are so many stories about Chinese restaurants around for decades, and now they’ve gotten replaced by modern types like tea shops or pastry shops,” Leung said. “Chinatown is still an Asian community, I guess, but it’s a lot more mixed than it used to be decades ago.”

To assist struggling small businesses, nonprofit organization Welcome to Chinatown distributed over $750,000 in small business grants throughout the community through its Longevity Fund, its co-founder Vic Lee said. Send Chinatown Love, which provides relief and growth efforts, raised over $1.1 million for the neighborhood and directly supported 59 merchants, according to its website.

Still, many small businesses are threatened by the changes. The new generation hasn’t frequented restaurants such as Hop Lee as often as older clientele due to differences in taste, said the restaurant’s owner, Johnny Mui.

“A lot of our businesses now, they’re more for a higher income bracket, and it’s just growing over the years slowly,” said Carry Pak, a Chinatown resident and CAAAV youth leader. “Having spaces where the immigrant community can still feel comfortable with being able to speak the language to street vendors or grocery vendors is particularly key.”

Another common issue facing Chinatowns: sports arenas and other public-use venues. Some argue stadiums can provide Chinatowns with more foot traffic and opportunities, though others say they have historically destroyed homes and attracted chain businesses that outcompete Chinatown businesses.

Plans for a new Oakland Athletics ballpark a mile from the city’s Chinatown, which prompted concerns from residents, fell through last month after the team purchased land for a new stadium in Las Vegas.

In Philadelphia, plans for a new arena have irked some Chinatown residents and business owners, who say developers and city governments have neglected the community’s needs.

A proposed $1.3 billion Sixers arena would sit blocks from the city’s Chinatown Friendship Gate. The privately funded arena is in the first stages of construction. Developers are working on gaining entitlements and approvals as the project moves toward its scheduled September 2031 opening date.

The development team expects the 18,000-seat arena to be a “major economic driver” for Philadelphians, projecting $400 million of annual economic output and 1,000 jobs.

Since the proposal was made public last summer, several Chinatown community members and residents petitioned the developers and city leaders to shutter the project. Experts previously said professional sports stadiums fail to generate significant local economic growth, and tax revenue is insufficient to make positive financial contributions.

The owner of Little Saigon Cafe in Philly’s Chinatown, a man known as “Uncle Sam,” leads a coalition of more than 40 association leaders against the arena development. Uncle Sam, a Vietnamese refugee, came to the city more than four decades ago.

“If the arena is built, it will destroy a community, destroy our culture,” he said.

Private and government-led investments in public spaces have pushed out lower-income residents, said John Chin, executive director of the Philadelphia Chinatown Development Corp. His organization empowers native Chinese speakers to voice their opinions to Chinatown’s elected officials, city representatives and Sixers development heads.

The Sixers did not respond to a request for comment on how the development would impact Chinatown.

Last month, Philadelphia Mayor Jim Kenney announced the city would conduct an independent study on the arena’s impact on the community.

Many Chinatowns have struggled to secure government support while they contend with tough conditions in the economy and the real estate market.

Yet some Chinatown leaders remain optimistic they can work with developers to maintain the neighborhoods’ character. Some leaders doubled down on fighting developers to preserve historic architecture and businesses, while others embraced development to grow opportunities for residents.

San Francisco Chinatown’s more than 14,000 residents, many of whom are low-income and elderly, have faced housing shortages. Modern businesses are taking over decades-old shops.

However, business owners who spoke with CNBC said Chinatown’s businesses, though still recovering, are keeping the city’s culture alive.

George Chen, who owns the contemporary Chinese restaurant China Live, remains optimistic about getting San Francisco’s Chinatown back to its heyday.

“You can look from my roof and go see pretty much the 22 blocks of Chinatown, and I think there’s a cultural relevance to keeping the immigrant story alive,” Chen said.

At least one U.S. Chinatown has grown while others shrink.

The Asian population of Chicago’s Chinatown has more than doubled in three decades, according to the U.S. Census Bureau. Many new residents are Fujianese from Southeast China and have driven new restaurants, buildings and support services.

Paul Luu, CEO of Chicago’s Chinese American Service League, said families have moved from other Chinatowns to Chicago’s to take advantage of the city’s nonprofits and the growing local job market. He added that its distance from the pricier South Loop makes prices cheaper than in other cities.

Despite the growth, Chicago’s Chinatown is facing some of the same issues as those in other cities.

Some residents have expressed concerns about a $7 billion development called The 78, which will include high-rises, residential towers, office buildings and a riverwalk to the north of Chinatown. Some fear The 78 would raise rents and property taxes, as well as push out local businesses and residents.

Luu said The 78’s leadership team approached Chinatown leaders early in development to hear concerns and work to establish more affordable and accessible housing and commerce.

As high-end development occurs in the right locations, it can promote the local economy and encourage progress, said Homan Wong, an architect on the board of directors for the Chicago Chinatown Chamber of Commerce. He said issues of parking and safety still hurt Chicago’s Chinatown but that the Chamber remains focused on working with developers to keep the community growing.

“The opposite of development would be decay,” he said. “The reality is that if you don’t move forward, you’re going to fall behind.”

— Noah Sheidlower reported from Boston, Chicago, New York and Washington, D.C. Pia Singh reported from Philadelphia. CNBC’s Rebecca Smith contributed reporting from San Francisco.