In cities across the country, ground-floor retail spaces often remain dark for years, even as the residential or office units above them fill up quickly. Ann Ehrhart, founder of EVERSTREET, a Boston-based retail advisory firm, says the root cause is rarely what developers assume. According to Ehrhart, chronic vacancy or high turnover in retail almost always indicates a fundamental problem in what she calls the retail equation: 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. The three elements must be in sync with each other and with the property’s location. When they are not, vacancy follows. Ehrhart’s firm specializes in diagnostic work for projects where the retail plan is not yielding expected results, effectively reverse-engineering the failure.
Ehrhart explains that the problem can lie in one or more of the three components. For instance, the tenant outreach might have targeted the right kind of retailer, but the space was never designed to accommodate them. Or the space and tenant mix are suitable, but the underwriting—rent structure and terms—is so unrealistic that no tenant can make the numbers work. Sometimes all three are internally consistent but are calibrated for a “destination” corridor, while the property actually sits in an “untested” one.
“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 for a long period, it can develop what Ehrhart calls a “vacancy stigma,” a reputation that makes leasing even more difficult. However, she insists that a space can be brought back from the brink if the underlying issues are 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 trap is trying to fix the symptom rather than the cause. Ehrhart notes that she frequently sees owners who have cycled through several leasing teams without changing outcomes. Swapping brokers while keeping the same strategy typically yields the same results.
For developers and asset managers dealing with dark storefronts, Ehrhart’s advice begins with diagnosis, not action. Before bringing in a new leasing team or cutting rents further, the merchandising, design, and underwriting must be evaluated together and measured against the specific corridor type of the property. Rent reductions alone rarely solve the problem if the mismatch is about tenant fit or corridor classification, not price. Her framework treats the corridor type—destination, convenience, or untested—as the fixed variable that everything else must align with, since location is the one factor a developer cannot change after construction.
Even experienced developers, Ehrhart says, often underestimate how expensive and irreversible retail decisions are, and how unpredictable the outcomes can be without a structured process. “Retail decisions are very expensive and irreversible, and outcomes feel almost impossible to predict,” she said. That is why she built a predictive modeling approach around market demand and location context, allowing decisions to be evaluated upfront rather than diagnosed years later.
For more insights from Ann Ehrhart on retail strategy and activation, visit EVERSTREET. The underlying message for developers is clear: the fix for chronic ground-floor vacancy is rarely a new broker or lower rent. It requires pinpointing which part of the merchandising, design, and underwriting equation is out of alignment with the corridor the property actually sits in.
