Developers typically evaluate ground-floor retail by the rent it generates, but Ann Ehrhart, a Boston-based retail strategist and founder of EVERSTREET, argues that this metric overlooks the broader economic impact retail can have on an entire mixed-use project. “A property’s address doesn’t change, but its location value can improve,” Ehrhart said. Her firm begins every project by asking how a location can become more valuable, and she sees retail as a key tool for achieving that.
Retail’s influence extends beyond the space it occupies. Ehrhart points to a restaurant that may take up 5,000 square feet but can make people want to live nearby, work nearby, visit more often, and spend more time in the neighborhood. While real estate typically measures retail through rent, net operating income, occupancy, and leasing costs, and developers also count it as an amenity that helps lease apartments or offices above, Ehrhart says those measures fail to capture the full economic impact of great retail and great place. “The storefront creates the experience,” she said. “The location captures the multiplier.”
Ehrhart cites research showing that walkable, mixed-use environments command measurable premiums in home values, apartment rents, and office and retail rents compared with less walkable locations. Municipal research she has reviewed also shows walkable mixed-use districts producing more property tax revenue per acre than lower-density development. She emphasizes that the premium is not for sidewalks themselves but for what they connect people to. “People aren’t paying a premium for sidewalks. They’re paying for what the sidewalks connect them to,” she said. Restaurants, shops, fitness, entertainment, services, and public spaces give people reasons to walk and to choose one location over another.
This dynamic is not limited to established downtowns. 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.
However, more retail is not the same as better retail. According to Ehrhart, 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.” This idea runs through the firm’s mission: tenants must be supported by the surrounding community for the space to perform over time. Retail that the neighborhood doesn’t use works against a project.
At the storefront level, the obvious question is how much rent a tenant can pay. Ehrhart encourages developers and investors to ask a second question: 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. It means being clear about what return you’re trying to create and where it will show up—whether in storefront income, residential rents, retention, office demand, visitation, land value, or future development potential. “That’s when retail becomes a capital allocation conversation, not simply a leasing conversation,” she said. For developers weighing a mixed-use program, 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?”
