Every community has it: that vacant, eye-sore building with an absent owner. Yet, economic and community developers alike still struggle to communicate the impact of that vacant building on the vitality of the downtown community.
At Main Street America’s recent Community Transformation Workshop, Donovan Rypkema of PlaceEconomics described that exactly. Calculating the impact of that white elephant building is possible with just one factor: rent. The rent a building owner intends to charge can tell us many things, from how much can be invested in the building, to the volume of sales needed to afford the space post-rehab, how much annual income a renter is making, and the catalytic impact of creating an upper-story housing unit for that renter.
When approaching local government, banking institutions, interested developers or the property owners themselves about the future of the building, it is crucial to have a basic understanding of what opportunities are being missed by the property sitting vacant. By using these basic formulas and figures derived from a Consumer Expenditure Index, you can make reasonable generalizations that some organizations spend thousands of dollars on consultants to tell them. Below is an outline for how these calculations can be done.
Start with calculating rent to determine household income.
Household income can then be used to calculate how much downtown spending could be captured if just one unit of upper-story housing was added (say, above your vacant storefront).
Commercial rent on a building can be used to calculate sales volume.
That then can be used to calculate the cost of a vacant building.
Although these figures will not be perfect, they can be used to further the discussion on development in your community. So, whether you are hoping to start that conversation about development downtown or looking for a way to substantiate the need for a vacant building registry in your community, use this information to gain a new understanding of your vacant building stock downtown. Happy calculating!