Developers evaluating ground-floor retail in mixed-use projects typically focus on the rent it generates, but Boston retail strategist Ann Ehrhart argues that approach misses the broader economic impact retail can have on an entire property. Ehrhart, founder of EVERSTREET, said that while a property's address doesn't change, its location value can improve, and retail is one of the most effective tools for achieving that.
Ehrhart points to the example of a restaurant occupying 5,000 square feet. A good restaurant can make people want to live nearby, work nearby, visit more often, and spend more time in the neighborhood. In mixed-use projects, developers already count retail as an amenity that helps lease apartments or offices above, but Ehrhart said traditional metrics like rent, net operating income, occupancy, and leasing costs don't capture the full economic impact of great retail and great place. "The storefront creates the experience," she said. "The location captures the multiplier."
The implications extend beyond individual storefronts. Ehrhart cites 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 producing more property tax revenue per acre than lower-density development. "People aren't paying a premium for sidewalks. They're paying for what the sidewalks connect them to," she said, noting that restaurants, shops, fitness, entertainment, services, and public spaces give people reasons to walk and choose one location over another.
In larger master-planned developments, ownership can shape density, streets, public spaces, dining, and connections between uses. "You're creating a location rather than simply reacting to one," Ehrhart said. That is where planning for future location value matters most, and it has particular relevance for developers weighing how to allocate capital across a mixed-use program.
However, Ehrhart cautions that more retail is not the same as better retail. 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. Once demand is understood, merchandising, design, and underwriting should align around it. "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 have to be supported by the community around them for the space to perform over time. Retail that the neighborhood doesn't use works against a project instead of for it.
At the storefront level, Ehrhart encourages developers and investors to ask a second question beyond how much rent a tenant can pay: what can this retail investment do for the value of the location? The tenant offering the highest rent may not be the one that does the most for residential retention, office demand, or foot traffic. That doesn't mean subsidizing retail without discipline, she said, but being clear about what return you're trying to create and where it will show up. "That's when retail becomes a capital allocation conversation, not simply a leasing conversation," Ehrhart said.
For developers, the practical step is to look past what a storefront is worth on its own. "The question shouldn't only be, what is this storefront worth?" Ehrhart said. "We should also be asking, what can this storefront do for the future value of the place around it?" The answer could reshape how mixed-use projects are planned, leased, and valued.
