Why Your City Should Build a Retail Strategy
(And How They Can Do It) - aka thinking outside the Big Box
“When retail’s built for everyone, it’s built for no one.”
Walk through any of America’s “it” neighborhoods and you’ll notice the same paradox: a row of darkened windows in places otherwise bursting with activity. The demand is there (read: people, money, energy) yet prime storefronts sit empty. Why? I reckon the issue isn’t a shortage of entrepreneurs; it’s that the math isn’t mathing for everyone. Our real estate, development, and leasing patterns have combined to set up established corporate tenants, not mom-and-pop. In the process, we’ve built for Starbucks, not for the soap-maker down the street.
But this isn’t just a market failure, it’s a big thinking problem. The problem isn’t that people stopped shopping or dreaming. It’s that our built environment and real estate processes forgot how humans actually create commerce: in small, adaptable, hyperlocal spaces. What I’m saying is …wait for it…
Yes…we need to think big by thinking small.
What We Lost: The Local Scale of Retail
I’ve written before that for most of history, commerce happened at the human scale. Read: where we live and walk. From Roman insulae and medieval workshops to Japanese shotengai to Chicago’s corner stores, retail was embedded into daily life.
Physical retail historically comes in about six forms: freestanding, embedded, mixed-use, agglomerative, interstitial, and itinerant. The first four are the ones most of us are familiar with. And for the last 100 years, we’ve pretty much banned them from anywhere near where people live.
Modern cities, especially in the US thrived on these first four forms. Then came the 20th century when the archetypical urbanist boogeymen of zoning, automobiles, and modernist planning pried apart living and working, shrinking opportunity into 5,000-square-foot boxes with 15-foot ceilings suited for brands and corporate tenants. Fancy malls on the periurban edges became the hot new thing at the detriment of neighborhood-facing stores. Retail became Big Corporate, and floorplans became massive, similar, and predicable to maximize sales per square feet. We built so much retail that our building of commercial real estate in the latter 20th century outpaced the rest of the world two-fold. Currently, the United States has significantly more retail square footage per capita than other major countries, with figures around 24-36 square feet per person compared to around 5 square feet in Europe and 11 in Australia.
We overbuilt, just a wee bit. A correction was due - and you probably know the story but beginning in the 1990s, after the mall heydays of the 1980s, enclosed shopping centers and big box strip malls began to decline.
And then came the internet.
Online shopping promised endless convenience and endless choice, and soon, the narrative quickly shifted. Physical retail was declared dead. Vacant Main Streets, the new normal.
But that story misses the truth.
Roughly 80% of all retail purchases in the United States are still made in physical stores. Why? Because we humans still like to see. And to be seen. And we love to touch things. No, really. Study after study shows that once a shopper handles an item, they are more likely to buy it. And to this day, unplanned purchases make up the bulk of purchases - spontaneous acts of discovery that no algorithm can replicate.
Retailers know this. The comeback of once-digital brands like Warby Parker and Allbirds into brick-and-mortar storefronts is proof that people still crave the physical experience of going out and buying a thing, whatever that thing happens to be.
We never stopped wanting stuff.
But we want novel stuff. The allure of shopping is the mystique of a great find, akin to a treasure hunt. Shopping locally at local shops with local vendors gives greater opportunity to find the weird, the esoteric, even the strange perhaps — an experience that the $5 DVD bin at Walmart simply cannot provide. And how many Macys does one really need, anyway?
However, our current real estate climate isn’t doing so well at producing the type of spaces upstart, entry-level vendors need. Development was once neighborhood-driven. It’s now Wall Street-driven and backed by outside capital. Construction costs have soared, leaving only well-capitalized developers (aka those backed by institutional or outside capital) with the means to build and maintain mixed-use projects. It’s a sharp departure from the era when individual property owners financed smaller buildings and leased them to neighborhood businesses. We got stuck thinking in the box, the Big Box that is.
As such, in many large developments, ground-floor retail is treated like a rounding error, an obligation penciled into a pro forma (the financial calculation that measures a project’s feasibility) rather than a real opportunity. Developers often include it reluctantly, viewing it as a loss leader that’s expensive to build, lease, and maintain. It’s left to sit, mom-and-pop be damned.
Even reformed zoning codes, often form-based, mandate first floor retail without stipulations on size or bearing on proformas, meaning we get a glut of first floor retail that remains vacant. There is no lack of entrepreneurs or small businesses, though! And there’s no lack of space, either! So, what’s the real issue?
Our zoning, real estate development, and commercial leasing deals eschew a “missing middle retail” that we once had. These involve more local forms of embedded and mixed-use retail, and embedded forms of less-local retail.
The emergent forms of retail throughout history involved informal typologies as seen on the left of the table above. As these typologies were developed before the car and still thrive in dense, walkable communities, they are inherently hyperlocal in nature. Meaning, they serve their direct community. As the commercial real estate industry made retail space a commodity, the modern disposition of retail is similar to our current housing industry: oversized product that’s overly expensive, unattainable for most and mostly accessible via car. Legal restrictions and building codes mean some of these typologies are outright banned in most areas. Atop of this, the zoning codes of municipalities have onerous restrictions on land use and commercial activity that all but prevents it anywhere near residents. Heck, even the Canadian urbanist playland of Toronto is trying to find ways to bring neighborhood-retail back after decades of outright bans.
For millennia, the easiest way to make a quick buck was to sell product near or where you lived. Now, for many, that path is illegal.
Because most retail is now either individuals selling online (non physical locations) or largely corporate spaces (read: oversized physical spaces) there’s a huge missing middle of the retail spectrum. A missing micro-middle that is either banned or not considered commercially viable. Let’s change that.
We need a gradient of retail opportunities - affordable, entry-level spaces that support everything from the street vendor’s hustle to the small entrepreneur’s vision, all the way up to the corporate players. This would mean encouraging, designing, and incentivizing flexible, scalable options that lower barriers to entry while still accommodating growth, blending adaptability with practical solutions for the U.S.’s regulatory and spatial realities.
Let’s not forget that economic mobility begins with spatial mobility: the ability to experiment, sell, and grow close to home. If cities are the soil, commerce is how we let people plant their money trees. It’s not just building economically infeasible live-work units, either. It’s allowing smaller retail options to happen in the first place.
Microretail??
microretail (noun)
mi·cro·re·tail | \ ˈmī-krō-rē-ˌtāl \A small-scale commercial space, typically under 500 square feet, designed to lower the cost and barrier of entry for local businesses, startups, and entrepreneurs.
Microretail gives entrepreneurs room to start, test, and grow without the weight of long leases or oversized spaces. These compact, street-level shops bring flexibility back to main streets and creativity back to the neighborhood economy.
Cheaper than conventional commercial spaces → Traditional storefronts often demand rents that only national chains can sustain. Microretail flips that logic and instead offers smaller footprints, shared infrastructure, and lower overhead so local makers and small businesses can actually afford to show up. A 350 SF stall at market rent of $27/SF is far more affordable than a 3,000 SF at a much lower price per square foot.
More accessible for proof of concept and new ideas → For a first-time entrepreneur, a 3,000-square-foot lease is a risk few can take. Smaller, more manageable stalls allow small experiments (pop-ups, seasonal stalls, short-term tenancies) that let ideas be tested in real time before scaling up. Think of them as test kitchens.
Low barrier to entry, easy to maintain → Smaller spaces mean fewer upfront costs, simpler permitting, and more adaptable design. These units can evolve as fast as their owners—expanding, contracting, or changing use as markets and neighborhoods shift.
What If We Built Local Again?
Imagine a coffee counter in a converted garage. A shipping container turned into a pottery studio. A former alley reborn as a micro-village of 300 SF shops that serve things like locally produced Kombucha or flowers grown from native plants. That’s exactly what some cities are doing - to impressive results. Here are some examples:
Press Bay Alley (Ithaca, NY) – A derelict printing press transformed into 200–500 SF stalls for bakers, jewelers, and microbrewers.
Stackt Market shows how cities can unlock entrepreneurship not through subsidies or mega-malls, but by lowering the spatial and financial barriers to entry. Photo: Stackt Stackt Market (Toronto) – A shipping container campus turned creative hub.
Camp North End (Charlotte) – a former Ford factory reborn as a creative campus, where micro-retail, food stalls, and maker studios coexist in reimagined industrial halls.
Each example makes a radical point: retail vibrancy doesn’t need to be big to work.
In Indianapolis, the St’Artup 317 Accelerator has embraced this idea. Partnering with developer SomeraRoad, the city created a 500 SF retail stall that doubles as a community-facing incubator, a proof of concept for small business growth. Once these entrepreneurs gain traction, the city helps connect them with local property owners to find a permanent home.
Yet even with this progress, true small-scale retail remains rare. And while the above examples look cool - they typify only agglomerative retail. What we still lack is the missing middle, spaces between the online shop, the food hall, and the corporate lease.
The Microretail Strategy Cities Could Adopt
There are online businesses running their shop from home and there are 3,000 SF stalls that remain unfilled. We need missing middle retail. And to do that, cities should strategize to create an ecosystem of retail opportunity - this can be done with intentional level-setting and holistic visioning on where opportunity lay - and matching it with those risk-takers willing to take the next step. This involves a spatial retail strategy and matchmaking the best fits. Why not a Tinder between small spaces and entrepreneurs?
Cities could take a page out of a good commercial realtor’s book - map the future hot spots, have a client list, and let the market do the rest. But the key should be on crafting, curating, and encouraging that missing middle retail: between 100 and 1,000 SF - this is enough to let an entry level entrepreneur see if their idea can take off, but not enough that they’ll go bankrupt paying for oversized rent. Let the size of space fit the size of the idea.
How to Build Your City’s Retail Strategy
1. Map the Potential
First, cities could establish a priority list of potential retail corridors, areas, or nodes that could support a viable retail concept with decent foot traffic and activity. You don’t want to insist on a field of dreams situation for a fledgling small business i.e. thinking if you build it, they will come. Small businesses work best around agglomerations of other businesses and first-time shoppers. They are still growing and should be located around and just off current activity corridors/areas or areas that have potential for future commercial activity. Areas with good bones, so to say with formerly mixed use property or zoning designations.
Once identified, these corridors or areas eventually could be granted “Opportunity Corridor” zoning overlays that offer incentives for property owners to include spaces for small businesses. The 21st century city is changing, and retail needs are changing to be more hyperlocal and experiential. We should stop merely mandating first floor retail, and shape that into a better, perhaps smaller form to meet entry-level entrepreneurs. Partner policy to match strategy.
➡️ Avoid “field of dreams” syndrome — locate where people already walk, bike, and gather or where they once did, natural nodes and corridors of business.
Opportunity Corridors could be tiered by emphasis zones based on proximity to existing businesses, commercial activity, and accessibility.
2. Build Relationships, Not Just Zones
Appoint a Retail Liaison to bridge small business owners and property managers within these Opportunity Corridors. They can inventory vacancies, mediate leases, and even coordinate short-term pop-ups or shared stalls. Also, a repository of in-state v.s. out-of-state owners could help to identify those property owners who may be really invested locally, and those who aren’t.
3. Develop a public-facing Retail Opportunity Registry
Cities could also go a step further by curating a partner network of emerging local businesses: a living, breathing roster of mom-and-pop shops, makers, and entrepreneurs seeking their first physical space. In parallel, municipalities could pair this with a registry of property owners willing to lease small spaces or host temporary micro-tenants (more on this later).
To encourage participation, cities might offer property tax relief or credit incentives to owners who provide affordable space for these emerging businesses, essentially rewarding those who act as incubators for local enterprise.
Together, these two databases would form an open-source marketplace where small businesses could find, and match with, the right kind of space. (I pitch this as the Tinder or Hinge of physical microretail and thirsty entrepreneurs - pun intended)
This platform could feature:
Available spaces under 1,000 SF suited for pop-ups, startups, and small retailers.
Property owners open to shared or flexible leases that lower entry barriers.
Move-in-ready or modular micro-units that can be activated quickly.
A “growth ladder” system that allows businesses to scale—moving from a 200 SF kiosk → 600 SF shop → full storefront as they grow.
4. Incentivize Developers to Think Small
Encourage inclusion of microretail stalls (under 600 sf) within new mixed-use developments. Offer trade-offs: fewer total square feet required (instead of a general regulation on “first floor retail”, and relief from managing vacant ground-floor space. New developments utilizing public monies could be encouraged through incentivization to include incubator spaces for new businesses.
Policy Hook:
“Right-size retail”: not every ground floor needs to be 3,000 SF. How can interior fit outs utilized shared bathrooms and amenities to maximize floor space? Entitlements could encourage more creative mixture of retail floor plates rather than monolithic stalls. Or, rather, allow more first floor residential than you normally would that could accrue more rent in exchange for some microretail within the development.
5. Pair Businesses with Hosts
We talked about maintaining a registry of emerging “mom-and-pop” entrepreneurs seeking space matched with property owners open to flexible arrangements. This is the first part of the Retail Opportunity Registry. The second is:
Provide property tax relief for landlords who lease to these start-ups → To make participation attractive, cities could offer targeted abatements or tiered credits to landlords who rent (and fix out interior stalls) to verified local entrepreneurs. In essence, it’s a civic investment in neighborhood vitality: a modest fiscal trade-off that reduces vacancy, supports local wealth creation, and turns “for lease” signs into storefront lights again. Over time, such policies could help rebalance commercial corridors away from corporate monoculture and toward the messy, human-scaled diversity that defines authentic urban life in and near residential neighborhoods that need them.
6. Zoning for Microretail
Cities could adopt zoning amendments along Retail Opportunity Corridors to permit live/work and garage-based businesses by right and incentivize the conversion of existing mixed-use properties into smaller-scale retail stalls. Just as Accessory Dwelling Units (ADUs) expanded housing choice, Accessory Commercial Units (ACUs) could expand economic opportunity giving residents and small entrepreneurs a foothold in their own neighborhoods. And most importantly, near where people live. Here are a couple things a zoning amendment might include:
1. Enabling small business use of garages, front yards, and accessory structures.
Cities should allow limited commercial uses (cafés, studios, repair shops, or maker spaces) in garages or outbuildings, guided by clear, performance-based standards. Shared restrooms, sound limits, and signage caps can manage impacts while keeping entry costs low. Pilot programs within designated Retail Opportunity Corridors can help cities test these uses, collect data, and then expand “by-right” permissions where they prove successful.
2. Reduce barriers through tailored code adjustments.
Modernize zoning and building codes to reflect the reality of small-scale retail:
Permit low-impact retail uses by right in mixed-use and transitional zones.
Relax off-street parking requirements for spaces under 1,000 square feet.
Prioritize adaptive reuse of garages and ground floors over new construction.
Allow shared restroom facilities across multiple microtenants, recognizing that most don’t need (or can’t afford) full code separation.
How to Make Retail Happen
Cities like Rochester, Indianapolis, and Toronto are already testing microretail’s promise. In each, the formula is nearly the same:
Start small.
Fill vacancies fast.
Keep it flexible.
Let residents become developers of their own blocks.
Microretail restores what cities lost: the permission to create.
When the smallest space becomes possible, the city begins to grow again, not from the top down, but from the garage or front yard up.
I don’t think we have a retail crisis. We have an imagination crisis. Microretail is not nostalgia, it’s strategy to empower our next generation of entrepreneurs. A new-old way to re-localize wealth, reduce risk, and rekindle civic life.
It’s time for cities to stop planning for brands and start strategizing for beginnings. →