Many cities around the U.S. are currently dealing with high vacancy rates in retail and office spaces. These empty storefronts can negatively impact communities and lead to financial losses for landlords. But they can also create opportunities for new or growing businesses looking for commercial space at discount prices.
For example, the retail vacancy rate in San Jose California currently sits at around 7 percent. There are empty storefronts in several prominent commercial districts, and landlords looking to fill this space with nearly any business willing to pay.
Mauricio Mejia, owner of Punch King Fitness in San Jose told NBC Bay Area about his experience, “Other retail spaces that are out there are offering big discounts,” Mejia said. “They’re doing 60-70% discounts because they’d rather take something versus nothing because it’s affecting the value of their spaces.”
And San Jose isn’t the only city experiencing this issue. Chicago’s Loop district now has a vacancy rate of over 30 percent. Santa Monica’s Third Street Promenade has a vacancy rate of 25 percent. Boston’s downtown shopping district has about 50 retail vacancies, worth a total of about 300,000 square feet of unused space.
It is worth noting, however, that there are also cities and neighborhoods experiencing rebounds or more competitive markets. For example, retail vacancies in New York City’s Upper East Side and Upper West Side neighborhoods actually fell between 2022 and 2023.
Ultimately, lower vacancy rates are better for communities and consumers. And they can lead to more vibrant and active shopping districts, which benefit the businesses occupying those spaces.
However, for those currently in cities with higher vacancy rates, it may be possible to break into in-demand spaces without paying high premiums for those areas. This may not be the right move for every business. But evaluate your location and your business goals to determine if a discount on commercial space, even if it’s just for a year or two, may ultimately help you get a new or growing business into an ideal commercial space.
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