How to Fill Vacant Storefronts
Every Main Street will face vacancies from time to time, and COVID only exacerbated this challenge across Connecticut and the country. Not only are persistent vacancies detrimental to creating and sustaining a vibrant downtown, but they also have a negative economic impact on the community. In this webinar, our presenter Ilana Preuss – international speaker, and fierce advocate for creating great places and small-scale manufacturing – shares:
- Innovative approaches to filling vacant storefronts from around the country
- Programmatic ideas to collaborate with property owners
- Long-term solutions to keep storefronts full by supporting local small business ecosystems
5 Reasons why vacant storefronts exist
- Cost of renovation: The cost to renovate a vacant space is too high and the market does not support a lease rate that supports the cost of renovation.
- Tax benefits: Property owners gain a tax benefit on the loss of not leasing space.
- Devalue underwriting: For new, big development projects, the owner doesn’t want to lower the price of the storefronts to not devalue the whole project if they are looking to sell or refinance at some point.
- Guaranteed lease: This is common to see in malls or big box strip centers, where a major anchor tenant has a guaranteed lease for an extended period of time so no one else can come into the space.
- Mismatch of real estate sizes and small business needs: A lot of communities have a lot of storefronts that are 2,000-10,000 square feet when a lot of small businesses need 500-1,000 square feet.
Context & national trends that are influencing our downtowns:
- Vacant storefronts reduce the value of nearby property by 20% or more. They reduce traffic to these areas and leads to a feeling of isolation in the community. The impact of vacancies are multi-fold and in many cases create a downward spiral in communities.
- During COVID, a lot of businesses pivoted, some survived, and many did not.
- Over 1 million COVID deaths impacted our householders, economy, and individuals. The psychological impact of the pandemic cannot be ignored.
- A lot of people started businesses in recent years without a lot of business experience. They started small business because they lost their jobs or decided to pursue their passion or a different quality of life.
- People are demanding higher wages and pay.
- Before the pandemic we saw demographic shifts such as decline in working age population and growing income and wealth inequality – which have only been exacerbated during COVID.
- A lot of major chains shrunk their footprint and are focusing on prime locations.
Strategies to fill vacant storefronts
1. Support small business
Specifically focus on small-scale manufacturing (businesses that make consumer products). These businesses have opportunities for different sources of revenue making them more resilient – retail, wholesale, online, pop-ups, etc. They are a draw for foot traffic in your downtown and bring people together.
- Provide financing to support these businesses
- Provide incubators, accelerators, or other support programs to help them gain business skills and/or how they can move into storefronts particularly when paired with market opportunities and financing
- Examples of training programs for getting home-based businesses into storefronts: Baltimore Home Run Accelerator, 37 Oaks
2. Commercial Vacancy Tax Ordinance
- Property owners that leave a storefront vacant for an extended period of time and do not keep up with maintenance pay a fee. This program takes political will and oversite.
- Examples: San Francisco, Washington D.C., Raton, NM, Mansfield, TX
3. Tax Increment Finance (TIF) or other funding vehicle with matching grants
- Provide matching grants to property owners for storefront buildout with signed tenants.
- Examples: Hartford’s Hart Lift Program, Longmont, CO
- Resource: CMSC Tax Increment Financing
4. Financing for local business to buy real estate
- Keep real estate ownership local by providing support and financing options for local small business owners who have the interest and capacity to purchase property.
- Examples: Pittsburgh
5.Commercial Land Trust
- Provide financing to support these businesses
View the Recording
- Read Illana Preuss’ op-ed in Next City, As We Move Through the Pandemic, Here’s How to Fill Vacant Storefronts for more information on the strategies mentioned above.
- Get Ilana Preuss’ book, Recast Your City and read the first chapter for free.
- CMSC Past Webinar: Vacant Property Solutions: Turning the Lights Back On
About Ilana Preuss
Ilana Preuss is the Founder and CEO of Recast City and the author of the new book “Recast Your City: How to Save Your Downtown with Small-Scale Manufacturing.”
Preuss’ passion for great places grew out of her experience working with small and large cities all over the country when she led the technical assistance program at the U.S. EPA Smart Growth Program, and as the Vice President & Chief of Staff at Smart Growth America. She has a Bachelor of Arts in Urban and Regional Studies from Cornell University and a Masters of City Planning from the University of Maryland.