What to do with Arlington’s vacant retail space

The age-old wisdom in business is that when you can’t move inventory, you lower your price. Developers in Arlington want tenants in vacant retail space, but the price isn’t right. Before approving rule changes for ground-floor commercial space, Arlington County needs to ask some hard questions.

Over at the TBD Neighborhoods blog, Rebecca A. Cooper writes that building owners are faced with a looming question: what’s better, office space or empty space? Of course, this overlooks a third option: lower-priced retail space.

It’s true that some retail locations are more desirable than others. Storefronts steps away from Metro are certainly in higher demand that those halfway between two stations. It’s also true that everything has a price-tag. Foot traffic may be lower at a less-than-ideal storefront location; but at the right price, business can still thrive.

While start-up retail businesses are often held back by high overhead costs, building owners in Arlington are petitioning the County to change the rules about who can lease ground-floor space. The Retail Task Force will soon meet with County officials to discuss the details. If approved, commercial space originally intended for retail could be leased as office-space or other uses.

Arlington County has gone to great lengths to encourage smart growth along the Orange Line, but building owners now suggest that the corridor may be oversaturated with retail. Even if lease prices were lower, are there any businesses left to move in? Many of us probably know someone with dreams of opening their own small business, whether a coffee shop or a craft store; but overhead costs in a place like Arlington make it a tough dream to realize.

The Retail Task Force sees value in these types of start-up businesses, but isn’t confident that start-up business owners have “renaissance skills” — or the skill set which enables business owners to be experts in all aspects of their business — which is necessary to succeed. In a slide deck (PDF) presenting its recommendations for Arlington, the Retail Task Force makes the case for a “retail incubator” to address this problem:

Businesses owners lacking “renaissance skills” cannot be successful and may, in some situations, have difficulty leasing space. The County should research the feasibility of operating a retail incubator in which select businesses could receive management guidance and build technical skills in a supportive and reduced-cost environment. A goal of the incubator should be to help business achieve the “credit worthiness” required by financial lenders, using SBA resources where applicable.

Establishing a retail incubator to help start-up business owners build the skills necessary to succeed is a noble goal. Doing it primarily so that they can qualify for lines of credit to pay for high-priced retail space is not. Given that ground-floor commercial space in Arlington has long sat vacant suggests that owners anticipate a future rise in the value of that space; or perhaps that the Small Business Administration might step in with low-cost business loans.

Before Arlington County moves forward changing retail rules, they should ask building owners hard questions about why this space cannot be leased at a lower price.