Pros and Cons of Siting a Business in a Historic District Versus a Strip Mall

The trend since the 1950’s has been to site new retail businesses in suburban areas, and not in central core historic downtown districts. The growth over the last half century in America has been to be where the population is and was moving. Downtown’s were and continue to still be dying. Over the last decade or so the historic downtowns have become popular destination stops for the customers to drive, walk or bike to and for suburbanites to shop, dine and relax. Most successful downtowns are not “cookie cutter” in they are not strips with large asphalt parking lots in front with a few trees and shrubs linearly placed to comply with zoning laws. Downtown’s are not only old buildings but collections of memorable events from days gone by, and in many downtowns of days now gone forever. So why would one consider opening a business in a downtown location?

Very well, let us get started. On one side you will find the “Pro”, the positions in favor:

The number one point in support for creating a business in a historic downtown district is if the local government is inclined to save and rehab. the area there often are programs set up to aid in rent, upfits, and marketing support. In many situations the rent is going to be less than what one pays in a newly built strip mall which can be a strong benefit. Many malls are owned by large corporate entities and have a rigid formula for what the rental income must be. The buildings in a downtown are often owned by private parties and/or descendants/children from the original owners and have no fixed costs so they can work with the tenants on rent and set asides.

The secondary positive point is customers like to visit points of interest. Customers like stories of the history, being informed of those who were there and what their individual histories were. They like to know where and how a town developed. The customer can brand not only with the store but with the location, which does not happen in a strip mall..

The third positive point is many downtowns have merchants who band together to help each other and to promote the location as much as they promote their own stores. There can be a collective effort to market the downtown location..

A 4th support point in favor is going to be that most downtowns are pedestrian friendly. People can walk leisurely to the shops and stores, dine outside on the sidewalks, and enjoy shopping at leisure, not elbow to elbow in a crowded mall..

Lastly, the 5th point is many downtowns set themselves apart by having activities going on such as festivals and events. Vendor booths, food stands, bands playing, farmer’s markets all are highlights of having a business in a downtown district. The area is alive and has a personality unlike strip centers..

And alternatively, to help keep this balanced, there’s Con; Against:

The primary point against creating a business in a historic downtown district is most do not have a large amount of drive by traffic such as strip centers on major thoroughfares. If drive by and car access in and out are crucial to the business then best not to be downtown. Downtown is a place where the main street is 100 years old, narrow and often delivery trucks are stopped in the road making the traffic pace much slower..

The second point in contra will be unless there is some provision to allow a slower time frame for the building to come to code then the cost of renovation to comply with codes can be super expensive for the tenant or property owner. Many buildings in historic downtowns have been rehabbed many times over in the course of their existence. Each “fit up” is an adventure with old wires, new floors, cut off pipes being discovered and to go from that point to 100% compliance with building codes designed for new buildings can be a financial nightmare.

A 3rd significant point against is even with high upfit costs there often are restrictive covenants imposed upon the area by local, national and state historic conservation groups. The community feels they have an interest in preservation and set higher standards which usually result in restrictions on what and how a store can be up-fitted..

4th point in contra will be much smaller square footage to work with. Most downtowns do not have existing spaces to handle chain grocers, big boxes, or car dealerships. These type stores bring to them lots of foot traffic but they require large 100,000 sq. ft. buildings and parking for 100’s of cars. Anything that large would destroy the downtown simply by it’s size in most historic downtown districts..

Fifth and finally, last point in contra will be often the historic downtowns have special taxes on the properties that other areas of a town do not. This means the taxes get passed on in rents often. The tax may be used to promote the area but in some situations those same taxes go into a general fund and are not used to enhance the businesses in the special tax districts..

So there we have some of the arguments for each side.

So, in the final analysis is creating a business in a historic downtown district a good thing? or a bad thing?

It depends on your type of business and your overall objectives. Many downtown business owners choose their locations because of the pace of life, quality issues and for many it’s civic pride to be part of a history, to add to the quality of that history and to preserve the good from those who preceded them. Often downtown’s biggest strengths are the character of those who choose to try. It creates an air of excitement that customers can build off of, enjoy and continue to visit over and over, bringing new friends to show off “their town”.