Michigan downtowns are entering into long-term trouble, business experts say.
“It’s not visible yet, but it’s clearly coming,” said Rob Fowler, the chief executive officer at the Small Business Association of Michigan.
A key challenge is that downtown businesses lost a significant portion of their profits as the pandemic meant thousands of white-collar workers have been working remotely since March, Fowler said.
“Blue Cross Blue Shield of Michigan said their employers can work remotely through 2021 and employees of DTE and Consumers Energy are staying remote at least through June 2021,” he said.
General Motors and Ford Motor Co. say their white collar workers will not return to their workplaces until the end of June.
Moves like those mean that thousands of employees — and potential customers — are no longer in Michigan downtowns, Fowler said.
“Many businesses are reconsidering their office spaces as a portion of their workforce can permanently be remote, which decreases the consumer base of downtowns,” he said.
Empty commercial real estate offices are skyrocketing, he said. ”It’s preventing the resurgence of downtowns, especially in Detroit and Grand Rapids.”
About 47% of Michigan’s small businesses have lost at least one employee since February, according to a recent survey by Fowler’s group. And 75% of them expect sales to be down. About 10% of small business owners think that they cannot make it.
“Our September survey showed that 42% believe that they cannot be profitable in the current environment,” Fowler said.
Local business groups are fighting back.
Commercial real estate is not in demand at the level of the pre-pandemic period, but it can adapt to the new business environment, said Lindsey Dotson, the director of the Charlevoix Main Street Downtown Development Authority.
“Office spaces are obsolete, and we are thinking of how those spaces can be adapted to continue to generate profit,” Dotson said. “Currently, we have two commercial real estate companies in Charlevoix downtown in a process of converting those empty spaces into housing units, as we have a huge shortage in affordable housing.”
The authority owns and operates a coworking space called The Vault in downtown Charlevoix that has been generating more profit than it had in 2019.
“If you live 6 miles away out of town, you can’t set up Wi-Fi at home,” Dotson said. “Coworking spaces in large urban areas are doing terrible due to the pandemic, but spaces in small towns are still in demand because of the internet access issue in rural Michigan.”
