Just after the financial collapse of 2008 many of the same people who had warned of the residential real estate bubble bursting started to warn of a bust in commercial real estate. Long before the Amazon Effect or Cyber Monday it was being pointed out that the United States had, in particular, orders of magnitude more retail square footage per person than the rest of the industrialized world.
Perhaps prior to the 2000’s people had begun discussing “the dead mall”, but it was usually in the context of an older, worn out shopping center being made obsolete by a newer, fresher model. Now we see the mall as having diminishing significance overall in people’s day to day lives, and even big box retail is taking a hit.
In my mind I had seen this trend having an impact on the malls, the big box retailers, and on many, many, many strip malls; but not on Main Streets. After all, Main Street retail was either of the elite, boutique type to have survived during the height of the mall era or, conversely, it was already “mostly dead” with the only thing left to do being to “search the pockets for loose change”.
Oh, how wrong I was.
Northampton, which I would have placed among the unassailable elites in Main Street retailing is losing storefront after storefront. A family member told me that in Mt Kisco, New York; a town surrounded by lots of money and with a great Main Street, city leaders have had to form a task force to address what they view as an alarming number of empty storefronts. Here in Springfield MGM seems to have given up on trying to get another retailer into its billion dollar resort complex and is turning half its vacant space into another bar:
All the while (as I previously mentioned) another promised retail development on Main Street has been shrunk down to a single drug store transforming this:
Into this:
In my neighborhood what keeps the storefronts alive are the Italian markets, local restaurants, take out places, and the bodegas. Apart from that we still have a florist, one coffee shop which isn’t part of a chain, a package store, a local pharmacy, a CBD retailer hoping to sell legal weed soon, a thrift shop, a bank, a dry cleaner, an African Market, a phone store, a physical therapist, a chiropractor, and 6 empty storefronts.
Some busy blocks:
The empty ones:
That’s all more or less to the south. To the north, directly across from MGM there is almost nothing. There is a day care center and a post office. One jeweler is vacating its space further up the street to be closer to MGM, a barber shop displaced by MGM moved across the street, and there are eight vacant storefronts. Some have been empty since before MGM was even thought of, but they stay vacant now because the property owners clearly believe that there is a chance to make that one big deal which will set them up for life, as opposed to doing the moderately hard work of creating or leasing to a successful enterprise themselves.
The jeweler moving in from up the street:
In all these buildings right across from MGM; a barber shop, the post office, and lots of empty storefronts:
Red Rose has shown that proximity to MGM can be a great thing, thousands of people are willing to leave the MGM footprint and spend their money elsewhere; strange though, those same people insist on getting something in return, they seem unwilling to just slip the cash through the mail slot of any empty shop. Given that what properties have changed hands have gone for a higher prices I could see higher property taxes creating enough pain to get the speculators to sell. It may be a two edged sword, however. What damage will it do to the ma and pa shops just down the street who do their best just to survive?
It wouldn’t be the first time that unrealistic expectations managed to snatch defeat from the jaws of victory.
As the big chains close stores and move others into smaller spaces there may eventually be demand for some of this space. It won’t all be online. I think it’s going to take time for the big guys to figure out the new reality before they make their next moves. Alternatively, what happens when a big box closes up and towns are left with nothing? Does a small shop owner step up to fill the void? Maybe. Hold on to your buildings. Their time may come again!
I’m with Patrick: things will sort themselves out, but it might take some time and it might not end up looking like what we were hoping for.
Still, the main thing is having more people living very nearby. In my neighborhood in ultra-expensive Cambridge, MA, there are a surprising number of empty storefronts. Several years ago some friends of mine pushed through a change in the zoning for the main avenue in our neighborhood, allowing for a higher FAR if developers would put in storefronts, thinking that more retail space was a way to revitalize the avenue. Now we have several new storefronts in new buildings standing empty, not just because of my friends’ zoning change but, ultimately, because there were already too many storefronts; what was needed for revitalization was more people.
It seems that empty storefronts are a failure of modern capitalism. Owners of a building in the public ‘marketplace’ should be expected to attempt to utilize it in a productive fashion. Might it be possible to ‘tax’ am empty storefront to recover the lost payroll taxes due to intentional vacancy?
Having watched de-industrialization here in the rust belt, I suspect it will play out similarly.
The top quartile by location will up-cycled to something better: lofts, condos, etc. The second quartile will be jam band space, artist studios, machine shop space, antique shops Just cheap square footage. The 3rd quartile will become storage. And the bottom quartile will be abandoned, spray painted, & left to nature. The cycle seems already well on it’s way if you look closely.