In its effort to make streets more pedestrian-friendly, Madison and other cities around the country have long relied on “mixed-use” developments, which combine offices and retail space on the first floor with apartments or condos in the stories above.
But the pandemic has exacerbated the already soft demand for some of these spaces, leaving more empty storefronts.
To address the problem, experts say, cities need to get creative in how they view those spaces, including converting some to apartments or private offices, promoting more pop-up stores and encouraging new businesses to use the space.
Even for existing businesses that have thrived in leased locations in Madison’s popular commercial corridors such as State, Monroe and Williamson streets, owners will need to stay nimble as new shopping habits have been baked into consumers’ expectations, said Thomas Fisher, director of the University of Minnesota’s Design Center.
Online shopping options and curbside pickup will likely be expected of every store from here on out, said Fisher, who is researching ways the pandemic is affecting business.
Shoppers have long sought out the convenience of online shopping, but the health concerns of shopping during a pandemic pushed e-commerce even more.
“This is really a situation that’s been going on even before the pandemic,” Fisher said. “One of the things that our research shows is that pandemics accelerate trends that were already underway.”
That will be especially important for Madison’s cherished independent retailers if they wish to hold on to their customer base, he said.
Providing support for businesses to make that transition will also be key, said Main Street America chief program officer Matt Wagner.
Downtown Madison Inc., the Madison Central Business Improvement District, the Black and Latino Chambers of Commerce and the Downtown Group have been working together to devise a program to support pop-up stores in empty storefronts, DMI president Jason Ilstrup said.
The goal of the program would be to increase the vibrancy of Downtown or other commercial areas while supporting a diverse range of new business, Ilstrup said.
“I think diversifying the mix of who owns those businesses, who are running those businesses, is very important,” Ilstrup said. “It really is to create a more diverse Downtown with what the business ownership looks like.”
For many, the experience of shopping in a physical store will continue to matter more than convenience, Ilstrup said. Downtown stores like Fromagination, Little Luxuries and The Soap Opera offer a unique atmosphere to shoppers, which is a draw for them, he said.
The program is still in development, but Ilstrup said he hopes to see some pop-up tenants in currently vacant locations by the fall.
Wagner said he could envision entrepreneurs putting those spaces to other uses, such as small-scale food or goods production — potentially with a small retail space — or multi-use businesses like a bike shop that sells coffee, or a bar that also carries niche goods. Businesses with multiple types of goods or services would also have the benefit of drawing multiple types of consumers.
“You have to be creative and not approach it with the lens of what was and what worked just before (the pandemic), but what it could be,” Wagner said.
Experts say zoning codes also need to change to reduce what has become, in some areas, a glut of empty ground-level commercial and retail space.
About 2% of Madison’s land area is zoned for mixed-use development, according to city planners. Any purely residential buildings proposed for these areas must receive conditional use approval, adding extra scrutiny to a project.
The goal of requiring first-floor commercial space is to make an area more walkable. Think of South Park Street or University Avenue: Pedestrians often feel more comfortable walking down a major thoroughfare if offices, shops or restaurants abut the sidewalk rather than residences. The buildings feel accessible and welcoming, not closed off behind locked doors.
But requiring commercial spaces on the first floor broadly is “unrealistic for the foreseeable future,” said Bill Connors, executive director of Smart Growth Greater Madison.
“There is little demand for small retail space because of competition from online retailing, big-box stores and, more recently, the COVID-19 pandemic,” Connors said.
Requiring first-floor commercial space has also placed a larger cost burden on apartment tenants, Connors said. Because commercial tenants can often find cheaper space in older buildings, developers will sometimes lower the rent below cost. To make up for that, developers charge more for their apartments.
Madison’s City Council is already considering a change to mixed-use conditions to reduce the required percentage of commercial space in such developments.
The city’s Plan Division said in a report that the changes would allow for a more predictable approval process for developers who would otherwise have had to seek conditional use permits. The division also said it could increase the amount of housing developed in the city.
State Journal reporter Dean Mosiman contributed to this report.
A program is now envisioned to encourage and support pop-up stores in empty storefronts.