Walking through any city, it’s common to see ground-floor retail spaces that have remained vacant for years, even after the residential or office units above them are fully occupied. Ann Ehrhart, founder of EVERSTREET in Boston, Massachusetts, observes this frequently and argues that the cause is usually more specific than developers assume.
“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 equation she refers to involves merchandising, design, and underwriting. When these three elements are out of sync with each other or with the location itself, vacancy follows.
It’s rarely just one thing. Ehrhart’s firm conducts diagnostic work specifically for projects where the retail plan is not performing as hoped. The process reverses her usual five-step framework, essentially reverse-engineering what went wrong. Sometimes the tenant outreach targeted the right kind of retailer, but the space was never designed to accommodate them. Other times, the space and tenant mix are both appropriate, but the underwriting—rent structure and terms—is so far off that no tenant can make the numbers work. And sometimes merchandising, design, and underwriting are internally consistent but built for a Destination corridor when 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 long enough, it can develop what Ehrhart calls a vacancy stigma, making it even harder to lease. The good news is that this is not necessarily a sunk cost. “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 risk is trying to fix the symptom instead of the cause. Ehrhart regularly hears from owners who have cycled through several leasing teams without changing outcomes. Swapping brokers while keeping the same underlying strategy tends to produce the same results.
For developers facing dark storefronts, Ehrhart’s advice starts with diagnosis, not action. Before bringing in a new leasing team or dropping rents further, the merchandising, design, and underwriting must be evaluated together and measured against the specific corridor the property sits in. Rent reductions alone rarely solve the problem if the underlying mismatch is about tenant fit or corridor classification rather than price. Ehrhart’s framework treats the corridor type—Destination, Convenience, or Untested—as the fixed variable that everything else must align with, since location is the one thing a developer cannot change after the building is up.
Even seasoned developers tend to underestimate how expensive 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,” she said. That’s why she built a predictive modeling approach around market demand and location context, allowing decisions to be evaluated up front instead of diagnosed years later.
For developers and asset managers dealing with chronic ground-floor vacancy, the underlying message is that the fix is rarely as simple as a new broker or a lower rent. It requires figuring out exactly which piece of the equation—merchandising, design, or underwriting—is out of alignment with the corridor the property actually sits in.
