The Economic Impact

An empty downtown commercial building substantially impacts the overall economy of a community.

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For example, a vacant small building in a typical small community could annually cost the local economy:

$250,000 in lost sales
$12,500 in lost sales tax revenue
$15,000 in lost rents
$1,500 in lost property tax revenue
$51,000 in lost building loan demand
$15,000 in lost business loan demand
$750 in lost property management fees

$24,750 in lost business profits
$16,250 in lost employee payroll
$5,500 in lost payments to utilities
$3,500 in lost advertising revenue
$5,100 in lost bank deposits
$1,250 in lost professional fees
$18,900 in lost community income

When totaled, a net impact of more than $420,000!

While these are ‘hypothetical’ figures, the calculations are accurate and clearly demonstrate the relationship between commercial activity and real estate value. The overall economic value of a downtown results from this interdependence.

Rebuilding downtown’s economic vitality is the ultimate goal of all Main Street programs.

Downtown commercial areas have declined in value over the past few decades due to a complexity of factors, and more recently, as an outcome of the COVID-19 pandemic. Overbuilt commercial areas, increasing competition from shopping malls, and resistance to change have all played a role in the economic decay of small, medium, and large downtowns. Downtowns are implementing new strategies to rebound from the concentration of office space and changes in population density due to the pandemic and the rapid transition to ‘work from home’ or hybrid work models. Reversing this decay, pivoting to new uses, and establishing a direction for a downtown to experience economic growth is central to the revitalization process and paramount to a Main Street program’s success.

Downtown’s economic value is based on its commercial activity and its real estate.

Although historical commercial buildings tend to represent a degree of artisanship that would be prohibitively expensive to reproduce today, the value of a downtown building also depends on its ability to support commercial activity. For real estate to increase in value, rents must go up, for rents to go up, economic activity must increase. Medium-sized communities like Hopewell are becoming more attractive to urban-dwellers who are now able to ‘work-from-anywhere’ – but these professionals still need appropriate housing, access to healthy foods, and places to socialize.

See what we are doing to combat the decay »

Source: National Trust for Historic Preservation – Main Street Newsꜛ

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