Boston Retail Strategist Argues Ground-Floor Retail Can Boost Entire Mixed-Use Project Value

Developers typically evaluate ground-floor retail by the rent it generates, but Ann Ehrhart, a Boston-based retail strategist and founder of EVERSTREET, argues that this metric captures only a fraction of retail's true contribution. “A property’s address doesn’t change, but its location value can improve,” Ehrhart said. Her firm approaches each project by asking how a location can become more valuable, and she sees retail as one of the most effective tools for achieving that goal.

Retail’s influence extends well beyond the physical space it occupies. Ehrhart points to a restaurant that may take up 5,000 square feet but can make people want to live nearby, work nearby, visit more often, and spend more time in the neighborhood. While real estate traditionally measures retail through rent, net operating income, occupancy, and leasing costs—and in mixed-use projects also counts it as an amenity that helps lease apartments or offices above—Ehrhart contends that “all of that is real value, but it doesn’t capture the full economic impact of great retail and great place.” When retail makes a place more desirable, the benefits can surface in residential, office, hospitality, and surrounding real estate values. “The storefront creates the experience,” she said. “The location captures the multiplier.”

Ehrhart cites research showing that walkable, mixed-use environments command measurable premiums in home values, apartment rents, and office and retail rents compared with less walkable locations. Municipal research she has reviewed also indicates that walkable mixed-use districts generate more property tax revenue per acre than lower-density development. She is careful to clarify what drives that premium: “People aren’t paying a premium for sidewalks. They’re paying for what the sidewalks connect them to.” Restaurants, shops, fitness, entertainment, services, and public spaces give people reasons to walk and to choose one location over another. This dynamic isn’t confined to established downtowns; in larger master-planned developments, ownership can shape density, streets, public spaces, dining, and connections between uses. “You’re creating a location rather than simply reacting to one,” Ehrhart said, emphasizing that planning for future location value is critical.

However, more retail square footage does not automatically translate to greater value. According to Ehrhart, the multiplier comes from the right retail, not the most retail. EVERSTREET evaluates fit through market demand—defined as the intersection of consumer demand and tenant demand—and then aligns merchandising, design, and underwriting around that understanding. “A great retail ecosystem isn’t necessarily the biggest one,” she said. “It’s the one people actually want to use and operators can successfully occupy.” This principle is central to the firm’s mission: tenants in a space must be supported by the surrounding community for the space to perform over time. Retail that the neighborhood doesn’t use works against a project instead of for it.

At the storefront level, the obvious question is how much rent a tenant can pay, but Ehrhart encourages developers and investors to ask a second question: what can this retail investment do for the value of the location? The two questions don’t always lead to the same answer. The tenant offering the highest rent may not be the one that does the most for residential retention, office demand, or foot traffic. That doesn’t mean subsidizing retail without discipline, Ehrhart said; it means being clear about what return you’re trying to create and where it will show up—whether in storefront income, residential rents, retention, office demand, visitation, land value, or future development potential. “That’s when retail becomes a capital allocation conversation, not simply a leasing conversation,” she said. For developers weighing a mixed-use program, the practical step is to look past what a storefront is worth on its own. “The question shouldn’t only be, what is this storefront worth?” Ehrhart said. “We should also be asking, what can this storefront do for the future value of the place around it?”