Developers weighing ground-floor retail space in mixed-use projects typically evaluate it through rent, net operating income, occupancy, and leasing costs. Ann Ehrhart, a Boston, Massachusetts retail strategist and founder of EVERSTREET, argues that framing captures only part of the economic story and can lead developers to undervalue what a well-chosen tenant mix does for an entire property.
"A property's address doesn't change, but its location value can improve," Ehrhart said. Every project her firm takes on begins with the same question: how can this location become more valuable than it is today? In her view, retail is one of the most effective tools for answering it, because its impact reaches well beyond the walls of the space it occupies.
Ehrhart uses a restaurant as an example. It may occupy just 5,000 square feet, but a good one can make people want to live nearby, work nearby, visit more often, and spend more time in the neighborhood. In mixed-use developments, retail also functions as an amenity that helps lease the apartments or offices above it. "All of that is real value, but it doesn't capture the full economic impact of great retail and great place," she said. "The storefront creates the experience. The location captures the multiplier."
The implications extend to how developers underwrite and merchandise retail programs. Ehrhart points to research showing that walkable, mixed-use environments command measurable premiums in home values, apartment rents, and office and retail rents compared with locations that aren't walkable. Municipal research she has reviewed also shows walkable mixed-use districts generating more property tax revenue per acre than lower-density development. She is careful about the cause: "People aren't paying a premium for sidewalks. They're paying for what the sidewalks connect them to." Restaurants, shops, fitness, entertainment, services, and public spaces give people reasons to walk and reasons to choose one location over another.
That dynamic is not limited to established downtowns. In larger master-planned developments, ownership can shape density, streets, public spaces, dining, and the connections between uses. "You're creating a location rather than simply reacting to one," Ehrhart said, which is where planning for future location value matters most.
The conclusion is not that developers should add more retail square footage. According to Ehrhart, the multiplier comes from the right retail, not the most retail. EVERSTREET evaluates fit through market demand, defined as the intersection of consumer demand and tenant demand, and then aligns merchandising, design, and underwriting around that demand. "A great retail ecosystem isn't necessarily the biggest one," she said. "It's the one people actually want to use and operators can successfully occupy." That idea runs through the firm's mission: tenants in a space must be supported by the surrounding community for the space to perform over time, and retail the neighborhood doesn't use works against a project rather than for it.
At the storefront level, Ehrhart encourages developers and investors to ask a second question alongside how much rent a tenant can pay: what can this retail investment do for the value of the location? The highest-paying tenant may not be the one that does the most for residential retention, office demand, or foot traffic. That does not mean subsidizing retail without discipline, she said, but being clear about what return is being pursued and where it will appear, whether in storefront income, residential rents, retention, office demand, visitation, land value, or future development potential. "That's when retail becomes a capital allocation conversation, not simply a leasing conversation," she said. "The question shouldn't only be, what is this storefront worth? We should also be asking, what can this storefront do for the future value of the place around it?"
