When vacancy is good
Whether we want to acknowledge it or not, Greenville was once a run-down skeletal mess of wig shops, boarded-up storefronts and abandoned hotels – I’m looking at you, Poinsett Hotel – that you only ventured to on Sunday mornings. Since then, downtown Greenville has seen a revitalization that has earned recognition from all over the world as the next big thing. As a community, we’ve seen buildings torn down and replaced with tall structures of steel and glass, small companies grow from an innovative idea to multimillion-dollar businesses and the cultural influence of Greenville’s art transcend our once-stale reputation. In other words, we’re killing it.
In the last year or so, though, people have come out claiming that we’re slowly losing our luster, pointing to the “space available” signs that have been popping up periodically on Main Street. It would be irresponsible to sit and ignore this observation. Over 2016’s second quarter, downtown Greenville’s vacancy rate has increased 1.3 percent, bringing the rate to 3 percent, according to Colliers International.
That’s the fact. Now, let’s look into what that really means: what caused it, what can be done and what this will lead to.
The easiest thing to point at is how expensive prime retail real estate is on Main Street. While that certainly has its place in the discussion, it’s lazy to blame the rising Main Street vacancy rates solely on rising rental rates. There are other economic factors that can lead to a business leaving the comforts of their Main Street retail location: one is a harsh reality, the other is an exciting realization.
My mother always raised me to lead with the bad news. So, here goes: Consumers, not rental rates, will dictate whether your business succeeds or fails.
In business school, I learned about a concept called “The Scotch Tape Store” – a hypothetical business in a consumer-driven economy that sells one thing: Scotch tape. Of course, people need (and want) Scotch tape, but how many times per week (or month, or year) do people need to go to a store that only sells Scotch tape? I’m not going to insult your intelligence by answering that. However, I think it’s pretty safe to say that, at the end of the day, The Scotch Tape Store was destined for failure from the start because consumers want more than one thing out of a store or restaurant.
In the context of Main Street (and the rest of downtown Greenville, for that matter), take note of the thing that separates every business that you’ve seen succeed from every business that you’ve seen fail: Successful businesses know that they can’t win as a one-trick pony.
This is a good thing, though. This means that, for the first time in a very long time, businesses in downtown Greenville are required to compete for business. These higher rental rates that businesses are paying aren’t putting them out of business; they just expedite the process.
Now that we’ve gotten the tough love over with, let’s look at the positive reason why businesses could be leaving Main Street. The growth of this city has created boroughs that extend beyond the famous confines of Main Street and, as a result, businesses are finding value throughout downtown – not just on Main Street. Think about it: If you have the option to pay $2 for something that will get you 10 customers or $1 for something that will get you 10 customers, which would you choose? The latter, obviously. That’s the kind of opportunity that businesses are finding.
With the rise of places like the West End, the Village of West Greenville and Stone Avenue in downtown Greenville and the emergence of smaller towns like Travelers Rest and Greer as places to gather, Main Street’s success has created some serious competition. Rental rates are rising everywhere, not just on Main Street, so we can take price out of the equation. What should really be looked at is value as a measure of relative price. It used to be that, if you wanted your restaurant or retail business to succeed in downtown Greenville, you better be on Main Street – not one block off, not a half of a block off, on Main Street. Welcome to 2016, folks. We live in a new Greenville where, just as businesses need to compete with each other, Main Street needs to compete with other parts of downtown Greenville.
Our town, once bordered by what is now known as NOMA Square on one end and City Hall on the other with nothing to the east or west, is now a full-fledged city that demands as much from its local businesses as it does the urban planners, developers and architects that literally build the environment. We are now in the middle of a beautiful dance between money and creativity where money talks and creativity listens. As members of this inclusive community, we should be excited about our healthy economy and continue to demand the best out of one another.