In cities across the country, ground-floor retail spaces often remain vacant for years, even after residential and office units above them are fully occupied. Ann Ehrhart, founder of EVERSTREET in Boston, Massachusetts, argues that this persistent vacancy is rarely a mystery but rather a symptom of deeper misalignments 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. When these three elements are not in sync with each other or with the location itself, vacancy follows. Ehrhart’s firm specializes in diagnostic projects for retail that is underperforming, essentially reverse-engineering the problem.
Ehrhart explains that the failure often stems from more than one issue. For instance, tenant outreach might target the right kind of retailer, but the space was never designed to accommodate their needs. Alternatively, the space and tenant mix could be appropriate, but the underwriting—such as rent structure and lease terms—might be so unrealistic that no tenant can make the numbers work. In other cases, merchandising, design, and underwriting are all internally consistent, but they are 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 has been empty for an extended period, it can develop what Ehrhart calls a “vacancy stigma,” making it even harder to lease. However, she insists that spaces can recover. “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 to treat the symptom rather than the cause. Ehrhart often hears from owners who have gone through several leasing teams without changing outcomes. Swapping brokers while keeping the same underlying strategy tends to produce the same results.
For developers and asset managers facing dark storefronts, Ehrhart’s advice is to start 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—Destination, Convenience, or Untested. Since location is the one thing that cannot be changed after construction, it serves as the fixed variable that everything else must align with. Rent reductions alone rarely solve the problem if the underlying mismatch is about tenant fit or corridor classification rather than price.
Ehrhart emphasizes that even experienced developers often underestimate how expensive and irreversible retail decisions are. “Retail decisions are very expensive and irreversible, and outcomes feel almost impossible to predict,” she said. This unpredictability led her to develop a predictive modeling approach based on market demand and location context, allowing decisions to be evaluated upfront rather than diagnosed years later.
The takeaway for owners and developers is clear: resolving chronic ground-floor vacancy requires more than a change of broker or lower rents. It demands a thorough examination of which part of the retail equation—merchandising, design, or underwriting—is misaligned with the corridor the property actually occupies. Only by addressing the root cause can a space be brought back from the brink of vacancy stigma.
