Tackling the paradox of underutilized land in small and midsized city downtowns

You can’t make more land. Even after generations of infrastructure expenditures aimed at overcoming this limitation via highways, commuter rail, and streetcars, downtown land in places large and small remains disproportionately valuable due to regional accessibility and concentration of legacy assets.  

Yet many American downtowns and Main Streets are plagued by a paradox: Land and buildings sit underutilized or vacant next to some of the most expensive real estate in their regions. This report attempts to explain that paradox and identify actionable and inclusive recommendations for resolution through on-the-ground research insights from four American small and midsized cities (SMCs)—Akron, Ohio; Birmingham, Ala.; Cincinnati; and Richmond, Va.—that are actively working to advance equitable downtown revitalization in a time of uncertainty and change. 

In the first report in this series, we outlined the key place-based challenges and assets that surfaced during our conversations with local stakeholders in these four cities. We also previewed findings on how SMC downtowns can leverage their unique land use mix, density, and urban form to advance inclusive growth, particularly when bolstered with meaningful local and regional partnerships. Here, we dive deeper into land use trends and offer recommendations to promote greater vitality downtown. 

This series also builds on our previous in-depth work in some of the country’s largest downtowns. In prior studies, we focused on how large downtowns were emerging from the COVID-19 pandemic, for a simple reason: Larger and higher-dollar office and hotel markets were big targets that were easier to hit during the pandemic due to their aggregate exposure to demand volatility. 

In this piece, however, we argue that the resilience of small and midsized downtowns offers lessons for civic and place-based leaders in cities and regions of all sizes. For example, downtown office vacancy rates in the four SMCs we studied are lower across the board than select large city counterparts.^1,2 For hotels, midsized downtown hotel markets recovered faster and more completely through 2024 than in large cities, with the exception of New York and a 2025 slump in Cincinnati due to convention center construction. For example, while downtown Birmingham’s pre-pandemic hotel market typically generated about $96 less in revenue per available room than Chicago’s, this gap narrowed to about $67 by 2025.  

Overall, while we find that SMC downtowns are resilient and offer lessons for peers of all sizes, we also identified four key challenges from our interviews and data analysis related to SMC downtown land use: 

1. Some SMC downtowns are underperforming relative to potential in placemaking and activation. 
2. Downtown utilization is transforming in the post-pandemic era. 
3. Publicly owned land is a key driver of underutilization and low productivity. 
4. Parking is a problem and an opportunity for SMC downtowns. 

The report concludes with four recommendations for improving the vibrancy and collective impact of downtowns of all sizes:  

1. Create a developer of last resort through private-public partnerships with the capital and know-how necessary to do transformative placemaking. 
2. Convert obsolete offices and retail into other uses, including for-sale condominiums. 
3. Support local commercial tenants in getting into and retaining stable storefronts. 
4. Increase the efficiency of parking while lessening the negative externalities tied to the existence of parking. 

Finding #1: Some SMC downtowns are underperforming relative to their potential in placemaking and activation 

A typical U.S. downtown is a “commercial core”—one in which jobs are concentrated more heavily than residents, as our 2023 analysis shows. Table 1 shows the average regional market share for jobs (11.7%) and residents (1.8%) across the 45 largest U.S downtowns. A recurring concern of local stakeholders was the underutilization of downtown assets with a strong potential of producing economic benefits for residents if activated with intention.  

The four SMCs we studied have relatively underutilized downtowns compared to these national averages. However, underutilization is not a universal rule. Birmingham’s downtown job market share is above average, and Richmond’s residential market share is close to average. Even among just four SMCs, there is a wide range of utilization. Any SMC in our study can look at a peer city and conclude that higher utilization is possible, particularly with collective action among civic and place-based partners. 

Yet while higher utilization may be possible, there are many headwinds. Because of a high prevalence of office work, downtowns are especially vulnerable to the shift toward hybrid and remote work, which has redistributed time away from offices and into homes.  

Visitation counts—how many people are going to a place—are a widely tracked metric of downtown vibrancy, though not the only or best metric. Using a travel behavior model built from a sample of cell phone location data, we looked at trends in total downtown trip volume by comparing a typical fall season Thursday and Saturday in 2019 and 2025 (Table 2). 

Only two out of the four SMC downtowns we studied exceeded their pre-pandemic level of visitation on a typical fall weekday in 2025. Yet, interpreting Table 2, we can see some of the nuances involved in understanding what “trip volumes” and “vibrancy” mean. Even though stakeholders specifically identified the downtown sub-areas as having vibrancy challenges, three out of the four sub-areas had more trips per acre in 2025 than their downtowns as a whole (Akron, Cincinnati, and Richmond). The identification of these sub-areas may reflect a gap between perceived and actual potential rather than absolute reality. 

In fact, in most cases the change in trip volume from 2019 to 2025 is weaker in the downtown sub-areas than in the downtown as a whole, reflecting the reality that if you start from a low baseline, it takes less new growth to recover after a setback. Thus, even though Cincinnati has by far the highest number of trips per acre downtown, Richmond’s change in trip volume (one measure of recovery) is stronger because it exceeds a lower baseline.  

However, this does not mean that Richmond’s downtown is stronger than Cincinnati’s. A neighborhood’s strength is multidimensional. Cincinnati’s Piatt Park sub-area has both the highest trips per acre in absolute terms and the greatest positive change in weekend visitation in the group, suggesting that baseline strength and recovery can coexist. Stakeholder perceptions of sub-areas also indicate other useful measures, particularly for areas of historic significance that may be relatively underrecognized with current land use and development patterns. 

Finding #2: Downtown utilization is transforming in the post-pandemic era 

Another notable theme we heard from local leaders was a stark change in downtown visitation—in both its timing and its purposes. This also shows in the data, where we found a distinct difference in weekday and weekend rates of recovery across all geographies (Table 2). While in Akron and Birmingham, weekday downtown visitation has not yet recovered to the pre-pandemic level, across all four cities weekend visitation downtown is 17% to 56% higher than prior to COVID-19. This represents a major shift in long-standing patterns of travel behavior that downtown land use and retail operating hours have likely only begun to reflect.  

In Table 3, we show retail density in the four downtown sub-areas. Cincinnati once again stands out for its relatively high number of businesses and business density. While Akron has the second-highest number of businesses, it has the second-to-lowest density due to the urban form of its downtown core, which is dominated by large blocks occupied by solitary institutional land uses. Richmond’s walkable urban form is much like Cincinnati’s (small lots and no setbacks), but it has the lowest number of businesses and thus, low business density due to high vacancy rates. Comparing Table 2 and Table 3, Richmond’s Broad Street sub-area demonstrates that relatively high visitation does not guarantee retail occupancy. 

The sudden and vast disruption of the pandemic exposed the inflexibility and unsuitability of many operations and systems in American life. This is highly visible in the case of retail and office business models taking up real estate in downtowns. Yet the example of Cincinnati in particular suggests that a vibrant “new normal” is attainable. 

Finding #3: Land ownership—and thus, site control—matters for downtown utilization 

A significant theme we heard throughout our fieldwork was the challenge of absentee or out-of-state landowners in downtowns. Yet when we analyzed property tax records for the four study cities, across all four, the single biggest landowner in the downtown was the public sector, usually the city itself (Figure 3). The attribute data available in tax records enabled us to calculate the total share of land downtown owned by tax-exempt entities, including governments, faith institutions, and nonprofits in Birmingham (55%) and Richmond (48%). These untaxable shares were even higher in certain sub-areas such as Birmingham’s Civil Rights District (75%) and Richmond’s Broad Street (66%). In all cases, the actual share of all downtown land that is untaxable is even higher, as the tax parcel datasets do not include land developed as roads, despite this land being included in the calculation’s denominator. 

The low share of city-owned land in Cincinnati’s Piatt Park sub-area (Figure 3) may explain the area’s strong foot traffic, as seen in Table 2. On the whole, however, across these four cities and many others, underutilized public land is a systemic problem. For every well-programmed park or renovated library on a public parcel, there are also many parking developments, vacant parcels, and land uses such as courthouses that have limited operating hours, single uses, and isolating designs. 

The public sector is far from alone as a landowner that routinely underutilizes its downtown assets. We analyzed tax records to visualize local distributions of geography of ownership by calculating the share of downtown land that was owner-occupied, the share owned locally in the same city, the share owned by an individual or entity in the same state, and the share of land owned by out-of-state investors. We found very similar patterns across all four SMCs, with a majority of land owned locally (Figure 4). 

When we repeated this analysis for each downtown sub-area, we found largely the same geographic distribution of ownership, with the notable exception of Richmond. The Broad Street corridor sub-area that we studied has an unusually low share of owner-occupied buildings, and a higher share of out-of-state ownership (Figure 5). In interviews, local stakeholders connected this ownership pattern with the unusually high retail vacancy relative to visitation levels shown in Tables 2 and 3.  

While a geographic analysis was illuminating in this particular case, stakeholders emphasized in interviews that problem landowners can be from anywhere (including City Hall). 

Finding #4: Parking is a problem and an opportunity for SMC downtowns 

Across the four downtowns, we heard challenges related to an outsized presence of surface parking lots and other parking garages, which led to underutilized land and safety concerns related to unsheltered homelessness. Our previous report in this series included maps of off-street parking land area (both surface and structured) and noted that the vast majority of trips in a typical SMC region are by car. In Table 4, we summarize the share of land area in each downtown consumed by off-street parking, and also include the same statistic for each corresponding sub-area. The land area devoted to parking is higher in three out of four sub-areas, which may also contribute to stakeholders’ perceptions that these areas are underperforming. 

The presence of economically marginal parking developments signals a potential opportunity for stakeholders motivated by both personal and more community-oriented intentions. Thinking positively, there are no demolition costs associated with redeveloping parking lots, and even if parking is required by the future land use, then some existing parking can potentially be recycled. However, many stakeholders expressed the view that the low carrying costs of surface parking enable land speculators to pose as parking lot operators. 

The commercial mix, ownership landscape, and distribution of surface parking together pose challenges for downtown vibrancy and growth. Institutional land uses don’t pay taxes, stunting the revenue potential of a significant share of downtown land. Parking is additionally marginal from a revenue perspective. All this adds up to a surprisingly high amount of unproductive land in downtowns, especially when considering our conventional understanding of the economic and fiscal value of downtown areas. 

Discussion and recommendations 

Despite their challenges, the SMCs we studied here show that higher downtown utilization is possible. But it is imperative that cities don’t wait for the market to make these changes happen. We identified the following strategies from the four SMCs we studied as well as a scan of current practices in U.S. cities that we conducted as part of the peer learning exchange: 

1. Create a developer of last resort through public-private partnerships with the capital and know-how necessary to do transformative placemaking 

Some land development opportunities are more complicated than others—and in a world with many opportunities, it’s possible for a very promising parcel to be passed over many times. When this kind of market dynamic has larger economic development implications, local governments and/or the local business community can intervene to push the parcel to productivity.  

As the dominant landowner, the public sector is the key player with the ability to affect vitality downtown. A July 2024 Lincoln Institute study found that offloading and redeveloping vacant publicly-owned parcels in Richmond could increase tax revenue, with both the newly developed parcels themselves and surrounding parcels increasing in value.  

Cities of all sizes have found success through public-private partnerships focused on accomplishing specific transformative placemaking goals. For example, the Cincinnati Center City Development Corporation (3CDC), founded in 2003, has completed over 100 real estate projects, including over 2,300 residential units (including condominiums, rental units, and affordable housing), 156 hotel rooms, 345 beds in service facilities for people experiencing homelessness, 20 acres of parks, and over 2.1 million square feet of commercial space (including office and retail). 

There are similar examples of this kind of private-public partnership in a variety of U.S. cities, including Milwaukee, Chattanooga, Tenn., and Rochester, N.Y. The public sector brings significant land control and unique financing options for place management (such as business improvement districts) and infrastructure (such as tax increment financing). However, the ability of the private sector to bring working capital and borrowing capacity that does not have to compete with other public sector priorities is what determines the scale of impact. In Akron, in the absence of such a partnership, the public sector had to take on the full risk of ownership and downtown development to secure and stabilize properties and set them up for development by local investors. This gamble paid off, as tax credits and financing are now in place for nearly a quarter of a billion dollars in planned development in large building rehabs and residential conversions. It is also a sign of maturity that the private, philanthropic, and public sectors have come together to capitalize the new Akron Downtown Development Corporation, so that government alone is not trying to solve a multisector challenge. 

2.  Convert obsolete offices and retail into other uses, including for-sale condominiums 

While the recent wave of office-to-residential multifamily rental conversions in New York and Washington, D.C. has garnered significant media attention, such conversions are a well-known practice in SMCs such as Winston-Salem, N.C., St. Louis, and Stamford, Conn. To create diverse, mixed-income residential communities, both ownership and rental opportunities (including subsidized opportunities) must be in the pipeline. An early focus on condominium development in Cincinnati created attainable homeownership options comparable to the city’s median pricing, and contributes to a higher owner-occupancy rate for downtown property (Figure 5). However, nationwide condo production is struggling, and state and local policy reforms could address the underlying reasons. 

In general, adaptive reuse is a critical placemaking and economic development strategy to strengthen downtowns, which are typically older than other activity centers in a region. But it should not be limited to offices and housing. Maximizing flexibility across uses and thinking beyond buildings to streets and right-of-way allocation are both imperative. That said, given the pervasiveness of the housing crisis, there is a playbook of policy levers that local leaders should consider in order to facilitate housing conversions. 

3.  Support local commercial tenants in getting into and retaining stable storefronts 

In previous research on neighborhood commercial corridors, we found that higher rates of owner-occupancy for commercial tenants were associated with lower vacancy rates. Long-standing joint guidance from the Treasury Department, Federal Reserve, and the Federal Deposit Insurance Corporation formally recognizes the category of owner-occupied commercial real estate as lower-risk for lenders. Both local governments and mission-driven private investors and their community development financial institution partners can help business owners with a proven track record of running one business expand to another: real estate. 

That said, real estate ownership is not right for every storefront business operator. Owning, maintaining, and operating a piece of commercial real estate is a real job, and every entrepreneur is not necessarily looking for another job that is different from the one they have been successful at.  

Therefore, it’s also helpful for commercial real estate landlords—and municipal landlords, in the case of public markets—to provide more incremental steps to the world of brick and mortar. These options include adopting profit-sharing leases, also known as “percentage leases,” in which the tenant pays a negligible base rent plus a percentage of sales. This more flexible rent model gives a new storefront business an onramp to connect with their customer base, rather than demanding instant success with no redistribution of risk and reward between landlord and tenant until year 10 (the end of the length of a typical commercial lease). Localities can incentivize the use of these leases by tying their use to façade and other tenant improvement grants. 

In terms of evidence of impact, 3CDC uses percentage leases for all retail tenants. The influence of 3CDC on storefront retail in downtown and the Over-the-Rhine neighborhood is particularly visible, with 127 storefronts in a 110-block area, and measurable, given the business density shown in Table 2. 

It is important to note that disinvested neighborhood commercial corridors often struggle with low business density even more than downtowns, and offering downtown-only solutions can seem exclusive. Solutions that speak to this challenge should be available to both downtowns and neighborhoods. 

4.  Increase the efficiency of parking while lessening the negative externalities tied to the existence of parking 

Parking can’t simply go away. All four case study cities have public transportation infrastructure, and in fact Cincinnati has a notable transit investment story with strong results, and Akron’s regional transit system was named the 2025 Outstanding Public Transportation System of the Year in the small regions category by the American Public Transportation Association. But driving remains the main way most people get around. People want to easily find parking near their destinations, and business owners value parking for increasing traffic to their properties (or for directly being the source of revenue for those who own and operate parking areas). Yet, small and midsized cities are crying out that they are drowning in parking. The fundamental paradox is that parking is oversupplied (meaning that spaces are more often empty than not), yet visitors to downtown still do not feel that parking is easy. And empty parking isn’t harmless: It is a long-standing driver of crime and safety concerns, it generates stormwater runoff, it radiates heat in summer, and it occupies space that could be used for something else. 

Increasing parking efficiency requires a combination of right-sizing supply while reforming parking management to make finding parking easier. This combination has the political benefit of providing real additional value to drivers while strengthening parking economics. Future new parking is an obvious target—by eliminating parking minimums for new development, cities can allow the market to decide how much parking is needed. For example, North Carolina is currently considering a statewide ban on parking minimums in order to avoid unnecessary impervious surface production. In addition, states and localities can broadly legalize accessory parking, where new land uses can meet their parking minimums using parking in other locations. 

On-street parking is the next-lowest-hanging fruit for local governments to reprice, remove, or some combination of both. Parking lanes can become priority bus lanes, bike lanes, expanded sidewalks, “streateries,” and more. Underutilized public or private surface lots can also be incrementally reprogrammed—for example, as food truck roundups or pop-up markets. 

Parking expert Donald Shoup and his collaborators emphasized the importance of linking decreased parking quantities to increased parking quality. This includes incentivizing or organizing the provision of more amenities for parking, such as valet service, electric vehicle charging facilities, and security. Most recently, new technology has enabled stall-level, multi-location parking inventory management solutions that can advertise available spaces to drivers and dynamically price the spaces. However, the competitors in this market are changing rapidly. Rather than issuing a request for proposals and getting locked into a single provider, the Parking Reform Network has highlighted the potential of creating a set of rules for parking apps—letting any compliant app operate and compete for market share while ensuring customers are led to parking spaces. 

Over 140 years after the invention of the automobile, we have yet to fully understand and enact policy frameworks to eliminate the negative externalities—the harms to society as a whole—associated with parking. In addition to adopting and implementing proven concepts from the “crime prevention through environmental design” literature, municipalities and place management organizations should convene a regular cross-sector public safety task force in which parking management entities (both public sector and private operators and contractors) can coordinate with law enforcement and other stakeholders concerning patrol schedules, data, and communications. 

Conclusion 

One of the defining macroeconomic trends of the last century has been the concentration of growth in American coastal “superstar” cities alongside the decline of manufacturing in the Rust Belt. These dynamics have been unfolding for generations, and small and midsized cities have had time—and people who care deeply about their continued relevance—to pioneer innovative policy responses to adapt their built environments to new realities. In the post-pandemic era, these lessons are newly relevant to both peers and superstars—and exchanging these insights can bring Americans together across regional divides.