Across many cities, ground-floor retail spaces sit vacant for years even as residential and office units above them fill quickly. Ann Ehrhart, founder of EVERSTREET in Boston, Massachusetts, argues that these persistent vacancies are rarely due to a single cause, but rather a breakdown in the relationship among merchandising, design, and underwriting.
“Ninety-nine times out of one hundred, when retail is chronically vacant or challenged or turns over, something in that equation is sick,” Ehrhart said. Her firm specializes in diagnostic work for projects where the retail plan is underperforming. The process reverses her usual five-step framework to identify what went wrong. Sometimes tenant outreach targets the right retailers, but the space isn't designed for them. Other times, space and tenant mix are correct, but the rent structure is unrealistic. Or all three elements align internally but are pitched to the wrong corridor type—Destination, Convenience, or Untested.
“We always, in a diagnostic exercise, project assignment, take that formula, and we look at what the retail leasing strategy has been to date, and we diagnose which of those levers is problematic,” Ehrhart said. “Sometimes it’s one, sometimes it’s multiple.”
Once a storefront sits empty long enough, it can develop a “vacancy stigma,” making it even harder to lease. However, Ehrhart believes a space can recover if the root cause is addressed. “You absolutely can bring a space back from the brink of that stigma, but you can’t do it without understanding what went wrong,” she said. The common mistake is treating symptoms—like switching leasing teams—while keeping the same flawed strategy.
For owners and developers, Ehrhart advises starting with a diagnosis rather than immediate action. Before lowering rents or hiring new brokers, they should evaluate merchandising, design, and underwriting together and compare them to the specific corridor type. Rent reductions rarely work if the issue is tenant fit or corridor misclassification. Since location is fixed, everything else must align with the corridor’s character.
Even experienced developers often underestimate how costly and irreversible retail decisions are, and how unpredictable outcomes can be without a structured process. “Retail decisions are very expensive and irreversible, and outcomes feel almost impossible to predict,” Ehrhart said. That’s why she developed a predictive modeling approach that assesses market demand and location context upfront.
The takeaway for developers and asset managers is that fixing chronic ground-floor vacancy isn’t as simple as a new broker or lower rent. It requires identifying which part of the equation—merchandising, design, or underwriting—is out of sync with the corridor. By diagnosing the problem first, owners can avoid repeated failures and make informed decisions.
EVERSTREET, led by Ann Ehrhart, has over 20 years of retail leasing experience and works with mixed-use developments in the Boston area and emerging markets. For more insights, visit everstreet.co.
