There’s really one tool Cambridge has to get deadbeat property owners to fill long-empty commercial spaces with tenants: Getting them to show up and explain themselves.
City councillors explained their shortage of options in fixing Cambridge’s worsening vacant storefront problem Monday after getting advice from the city solicitor at a March 11 committee meeting.
People want the city to “tax and fine the heck out of people who sit on their property,” councillor Paul Toner said. “We were advised that we actually cannot do that, and especially we cannot target just one property owner.”
“Our leverage in terms of forcing people to rent their space is nothing really, very little. But we do have the power of the pulpit,” vice mayor Marc McGovern said. “We do have the ability to call people in and hold them accountable for why properties are sitting, five, six, seven, 10 years vacant.”
A meeting with those property owners – none of whom were mentioned by name in either meeting – will be scheduled, Toner said.
Developer Gerald Chan’s AMC Loews theater on Church Street in Harvard Square has been empty for more than 12.5 years, and in year five city councillors threatened him with a land taking if he didn’t develop a plan for its use; the space has never been leased. Chan presented a plan for a 60,000-square-foot building with two lower-level movie screens; street retail; and five stories of office space. He wanted to cover the building’s facade with digital screens. There’s been no action on the plan since a June 2019 test of the cladding.
At the March 11 meeting, business experts urged officials to appreciate the many reasons for empty storefronts and to separate small property owners who are doing their best in hard times from the handful of big property owners seeming to make no effort to fill spaces.
As of November, there were 109 ground-level storefront vacancies in Cambridge, according to the city’s Economic Opportunity and Development department, which does six-month surveys. Forty-six percent of those are considered long-term vacancies because they’ve been vacant more than two years – though a few of these spaces have leases pending, department director Pardis Saffari told councillors at the meeting of their Economic Development & University Relations Committee.
https://embed.documentcloud.org/documents/25590019-250311-economic-development-university-relations-committee/?embed=1
City data goes back to the fall of 2019, when the figure was 54 storefront vacancies.
“It doubled in five years. And I think we have a softening retail market where it could double in the next five years,” said Michael Monestime, president of the Central Square Business Improvement District.
“What happened in that time was a pandemic where people started working from home, people are eating less at the restaurants. Everyone’s online shopping for the ease of it,” Monestime said. “Traditionally, what we use ground-floor retail for is just a dinosaur, almost. We need to be creative about how we activate our commercial districts and what ground floor means.”
Reasons for empty spaces
Considering the changes in the nature of retail, it may be time to look again at zoning law that demands ground-floor retail space be included when a building goes up, said Denise Jillson, executive director of the Harvard Square Business Association.
“We ended up with more storefront space that we probably need,” Jillson said, some of which lacks flexibility and by necessity waits years for the right tenant to come along. McGovern recalled how the need for a coffee shop was written into the zoning where Masse Hardware closed in Observatory Hill, because it was what neighbors wanted. “It stayed vacant for years and now it’s a day care, because nobody wanted to open a coffee shop,” McGovern said.
Others had more reasons why spaces stay empty. Saffari added reasons such as owner retirements and business closings, building sales and “unsuitable rent increases” to the list.
MJ Pullins, a board member of the small-business association Cambridge Local First and owner of the adult boutique Hubba Hubba, said she leased space in a building where four of nine storefronts are vacant. During recent “ugly” rent negotiations against the backdrop of a fellow tenant leaving because of mold, the landlord “straight out said, ‘Hey, we’re going to take this building down in five to 10 years. We’re just holding on to it to sell it,’” she said.
“It’s a tax write-off,” Pullins said, describing the practice of “land banking” – holding onto real estate as an investment without plans for use in the short term.
Meanwhile, there are companies such as CVS that will leave a space but keep paying the rent specifically to keep it unoccupied. The pharmacy chain did that in Harvard Square for at least three years at a prominent location, Jillson said.
Legal limits
Concerns about empty storefronts that deaden street activity, show neglect and invite rats led city councillors and city staff over the past few years to offer business owners financial and technical support as well as storefront improvement equipment and marketing grants, and to run a free Site Finder program for entrepreneurs looking for space. A proposed policy would have called for a property owner to notify city staff within 90 days of a vacancy, pay a registration fee and put paper or art in the windows “so at least it is inviting as people walk by,” Saffari said. Leasing and contact information would also have been required.
At the March 11 meeting, that language was proposed for a staff review before summer – that vacant storefronts would have to be registered with the city and show leasing availability or status in a window.
Owners could be fined up to $300 per day for failure to comply, or more if the city appealed to the state Legislature for a home rule petition, city solicitor Megan Bayer said. But the fine would have to be the same no matter how big or small the owner.
“We do have a public health, safety and general welfare interest in not having blighted business districts,” Bayer said. “But there are some scofflaws who are not really deterred by a $300-a-day fine.” And in the eyes of the law, she said, “a sliding scale wouldn’t make sense if it’s based on the economic situation of the property owner … the fine has to be based on the actual harm that’s caused by the property looking blighted.”
Sparing the small landlord
The law may not be able to make a distinction between big and small property owners, but the city must, said business leaders at the meeting including Monestime, Jillson and Jason Alves, executive director of the East Cambridge Business Association.
“There are different sets of challenges,” Alves said. “There’s a lot of reasons for vacancies, and my main caution is making sure that our small property owners are not lumped in.”
As an example, while a policy for fines was never enacted, a program for beautification of empty storefronts was. It relied on filling windows with art printed on paper or vinyl – at the property owners’ expense. “The artwork can be very cost prohibitive if it’s vinyl,” Saffari said. “That’s one of the reasons why we stopped the program: It actually wasn’t resulting in the results that we all wanted to see, because only the property owners that can afford it could do it.”
Comparing small property owners with the land-banking property owners – meeting chair Toner guessed there were 10 of them – Jillson warned against enacting a law that would feel like a punishment. “Most people are doing the right thing, but those who are deliberately not, they have some other intention. This will not change that,” Jillson said. In her experience, “for the most part, property owners, particularly those with ground-floor retail, have been trying mightily to rent their spaces.”
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Gerald Chan owns far more real estate in Harvard Square than the cinema. He is a billionaire, so there is no hardship excuse for the blight that he is causing on Church Street and in other spots.
I realize that the City Council cannot target one person, but the rest of us need to be clear about who the large players are.
What prohibits the city from a vacancy tax?
The article doesn’t explain: How does a tax write off work for these landlords and what is land banking?
I believe vacancy taxes would have to be approved by the state – but why not try to get that done? I would think that such a tax could be calibrated w/r/t the duration of the vacancy and possibly even w/r/t demand.
Secondly, we talk about “small property owners” as if they were struggling mom-and-pop grocery stores. Given Cambridge property values, these are in fact people with substantial assets of from one to many millions of dollars. The fact that they can sit on their properties for years suggests that they are not all that desperate. If they were truly desperate, they would lower the rent or sell .
Active commercial buildings are required to conform to city zoning regulations for signage and storefront design. Closed-up buildings should be required to comply with the same rules: no temporary signage, no blackout paper or wood panels covering storefront glass, etc. This at least makes the owner’s responsible for the urban landscape, while they sit abandoned.