This paper explores the relationships between place and subjective well-being. Despite the substantial growth in studies on this topic across multiple disciplines, there is still a long road ahead for urban planning theory. This work introduces a novel conceptual framework that illustrates in a structured manner the interrelations between place and subjective well-being, uncovering the mediating role of sense of place and highlighting the transformative potential of micro- and small-sized businesses in shaping urban neighbourhoods’ sense of place. The study emphasizes the significance of understanding subjective well-being at the neighbourhood scale for informed urban planning and policy making, contributing to the theoretical discourse on people-place relations.