Post #390, (that’s not a) retail vacancy rate

Posted on September 19, 2019

The Town of Vienna is asking Fairfax County for funds from the Fairfax Economic Support Fund.  They’d like Fairfax to pay for half of a $100,000 economic development study for the Town.  A brief presentation on that was given at the 9/17/2019 County Board of Supervisor’s meeting.  You can see the contents of the presentation at this link (.pdf).

The point of the Fairfax Economic Support Fund is to invest in development around the county, where the expected increase in Fairfax County taxes will cover the cost of the investment.  Fairfax County staff appear to judge that this study will boost tax revenues by more than the $100,000 cost.  So they recommended funding it.

For this posting, the purpose of the proposed study does not much matter.  Based on the bullet points, it sounds like this could be merely finding some justification for MAC zoning.  (“Placemaking” is a giveway there.)  But it might actually be a legitimate market analysis.  If so, I’d applaud that, because, better late than never.  It would be good to have some reasoned analysis of (e.g.) how much more retail space Maple Avenue can be expected to absorb, what types of new retailers are likely to enter that market, and so on.

The only point I want to make here is a technical one.  The Vienna proposal is cited as showing a “15% vacancy rate”.  And that is immediately interpreted as a retail vacancy rate on Maple.

First, that’s not a vacancy rate.  Or, at least, it’s not comparable to the way anyone else calculates a vacancy rate.  Vacancy rates — office, retail, or commercial — are always expressed as a percent of the available space.  (Vacant square footage over total square footage.)  The Town’s number, by contrast, appears to be a count of addresses (“spaces”).  The Town counted 138 vacant “spaces”, of which 68 were on Maple.

So, e.g., Giant Food counts as one space.  The Maple Avenue Market would have counted as one space.  Those two would be weighted equally in a simple count of addresses.

Second, it’s not clear that’s a count of retail spaces only.  That matters materially, because office vacancy rates in Fairfax County are quite high (see below).  My guess is that the Town’s records do not show which spaces are retail and which are office, and that in all likelihood, that’s a count of all commercial addresses in Vienna.

Third, that’s not Maple Avenue in isolation.  The overall fraction of addresses that are empty appear to be for the Town as a whole, not for Vienna.  (I can’t know for sure, because there doesn’t seem to be any copy of this study available on-line on either the Vienna or Fairfax County websites).

This is not a criticism of the number.  A quick-and-dirty throw-away number like that , that’s perfectly fine if it gets the Town the money it was seeking.  The Town took its records, counted addresses, and used that as part of its proposal asking Fairfax to cover half the cost of the study.   I doubt, for example, that the Town’s tax records list the square footage of each establishment.

This is a criticism of how that number is being quoted and used.  My only technical point is that you should NOT compare the Town’s number to any published estimate of retail vacancy rates.  Published estimates will be done properly, based on square footage.  The Town’s number, by contrast, equates (e.g.) a tiny shop space with Giant Food.

FWIW, here are some recent (2014) estimates of actual retail and office vacancy rates, prepared by the Metropolitan Washington Council of Governments (MWCOG) using data from CoStar.  The numbers here will vary modestly from other estimates, based on the exact details of how they went about the calculation.

Source:  MWCOG, CoStar.

Finally, also FWIW, if you want to see how I calculated a ground-floor retail vacancy rate for Maple, showing data and methods, see this post.  Those numbers are a little stale at this point, but they still shouldn’t be too far off.  For further background on the mix of retail on Maple, see Post #201 and Post #208.