Contests for free business rent helping reinvigorate downtowns

Retail Space

Some downtown associations are offering free rent as a way to entice businesses. Image: Flickr / 42dreams / CC-BY

The cost of starting a business can be very high. A retail space, storefront or office adds to the overhead costs of a business, especially in the first few years. Several small and mid-size towns are attempting to reinvigorate their downtown areas by offering businesses a year of free rent.

The problem of empty space downtown

Vacancies in downtown retail spaces can be a very difficult problem for cities. Vacant buildings or spaces tend to pull down rent costs, increase property crime and generally contribute to downtown blight. Property that is rented out, however, can help revitalize a failing downtown. With average rent costs for downtown spaces at easily more than $10,000 per year, though, convincing a business to take the leap can be difficult. As Tom Murphy explained to CNN Money:

“A vacant building “is a missing tooth. It creates a dead space. And if there are several of them, it is less of an attractive place to walk.”

A creative solution for businesses

Several mid-size cities, from Tempe to Deluth, are tackling the problem of empty retail space with a simple solution. By giving the space away in contests, these cities are building buzz around their downtowns while making the space more walkable and attractive. The competitions vary from city to city, as do the prizes. In Tempe, Ariz., a gourmet popcorn shop won the contest, and more than 20 new leases were signed as a result of the contest. Deluth’s “Go Downtown Grow Downtown” contest eventually rewarded three businesses with a year’s free rent, instead of the two they had intended on. All of these contests require the winners to sign a lease of some length beyond their free year, between two and five years.

Is a retail space worth the cost?

Opening a retail space just about anywhere can be a very expensive proposition. For business owners, opening a retail space means not only a commitment to a large rent payment each month, but the commitment to keeping it open, paying the utilities and insuring the space. For some businesses, it is impossible to run without some kind of space for customers to come to. For many businesses, however, it is possible to run a virtual office or virtual storefront. Whether a business must rent a storefront space depends entirely on the plan behind the business.


CNN Money
Sun Sentinel
Downtown Duluth (PDF)
Baltimore Sun

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