How to tackle the alarming increase in vacancies on Main Street

James Barrood,?CEO, Innovation+, Advisor: AI for Good Foundation | Future World Alliance | Tech Council Ventures | JumpStart Angels -?November 24, 2023, Spotlight

I was walking around New York City recently and was struck by the number of retail vacancies in historically vibrant areas. Clearly, the COVID-19 pandemic had a negative effect on these commercial neighborhoods. In addition, the density of traffic formerly provided by office workers has not rebounded sufficiently due to remote work trends.

Many businesses could not survive without that important foot traffic when combined with staff shortages, higher wages, increased cost of goods/services due to inflation as well as higher rents. I couldn’t imagine how the stores that were still in business have survived as their profit margins have been squeezed dramatically.

This reality has affected many businesses across New Jersey as well. Aside from wealthy towns and unique community “metroburbs” like Bell Works in Holmdel, so many main streets, once bustling centers of commerce and community, are now facing an alarming increase in vacancies.

The vacancy issue stems from a convergence of factors. The digital age has ushered in e-commerce giants that have outmatched local retail in convenience and price. This trend started well over a decade ago and I recall noting it in a keynote I gave to my entrepreneurship center colleagues in 2012 at Georgetown. I urged them to help their local retail entrepreneurs confront the online competition which offered super convenient and quick delivery that would dramatically hurt businesses.

The pandemic has accelerated main street vacancies to unprecedented levels. Lockdowns and social distancing hit the retail sector hard, with businesses in densely populated areas like Newark and Paterson shuttering permanently. Small businesses, lacking the financial reserves of larger chains, have been particularly vulnerable.

What’s being lost

The implications are stark: lost jobs, diminished tax revenue, and eroding social cohesion. The closure of family-run businesses, which often serve as community anchors, contributes to a sense of urban blight and decreased community engagement.

Yet, resilience has been remarkable. In Jersey City, initiatives like the pedestrian plaza on Newark Avenue have breathed new life into the area, with outdoor dining and markets drawing crowds. Red Bank has leaned into its arts and culture scene to create a vibrant, engaging downtown that has weathered the storm better than most.

Montclair offers a beacon of hope, where a concerted effort to bolster local commerce with cultural events has kept the local economy robust. However, Atlantic City shows how a reliance on tourism can falter, with the pandemic highlighting the vulnerabilities of such economies.

There are ways to counter this trend.

What to do

First, subsidize small businesses to help them afford rents. The New Jersey Economic Development Authority has several new programs, some started during the pandemic, which have been very helpful to communities. In addition, local nonprofits like GNEC in Newark help with additional loan and education programs. However, more support is needed. Cities and towns themselves should also be creating a main street fund to complement other state initiatives. Corporate stakeholders can also help. For example, a novel program which helps restaurants is Audible’s Newark Working Kitchens which launched during the pandemic and continues today to support the community’s restaurants.

Second, create a more vibrant community with frequent events, entertainment and activities that attract local shoppers as well as nonlocal visitors. The addition of weekly or biweekly?farmer’s markets also helps.

Third, local business and community leaders should encourage residents to shop more often as stakeholders committed to the vibrancy of the community. In addition, they can ask neighbors to support a main street Go Fund Me initiative.

The increase in main street vacancies is a multifaceted problem, compounded by the pandemic, but not without solutions. The experiences of New Jersey’s towns offer a microcosm of America’s broader challenge and the potential paths to revival. By fostering innovation, community spirit and supportive policies, the tide of closures can be turned, reinvigorating our towns and preserving the essence of our communal spaces.

Please do your part and support your local main street entrepreneurs. This Saturday is Small Business Saturday so please show up and thank them with your visits.