Many cities in the Global North that aspire to be at the forefront of sustainable urbanism have adopted Sharing City agendas. In the development of socially inclusive cities, grassroots sharing initiatives have been seen as key in disseminating more sustainable forms of provisioning. This article examines a case where ambitions to accommodate grassroots sharing initiatives failed, namely in the renewal of the sustainability and sharing-branded area of Masthuggskajen in Gothenburg, Sweden. In order to analyse the interactions and power relations between governance bodies and grassroots sharing initiatives, and how these are shaped by spatial dimensions, we explore the opportunities for grassroots initiatives to influence sustainability goals in the development of high-profile urban districts. Our findings suggest that while areas branded as sharing economy districts acknowledge the potential of grassroots initiatives, high rents precipitate the displacement or co-optation of non-commercial actors, thereby preventing deeper transformation. In more peripheral areas, grassroots initiatives are more likely to thrive, but often fail to reach beyond a critical niche. In order for grassroots sharing initiatives to influence the meanings and practices of sustainability, this spatial paradox, we argue, calls for political solutions at both the local and national level.