Walking down Newbury Street, you may notice the dozens of vacant buildings and storefronts, which were once full and bustling with shoppers. Soaring property taxes and rents might be to blame, as store owners struggle to maintain steady profits. For decades, Newbury Street has been one of Boston’s main attractions, home to some of the biggest names in retail fashion, luxury retail boutiques, and prominent restaurants. Rising demand for Boston’s famed shopping area has caused a high increase in property values, leading to higher property taxes and rents for businesses. One of the most recent businesses to move is Hempest, who has been on Newbury Street for over twenty years. Hempest was forced to change store locations due to soaring rent costs, and has moved one block away from Newbury Street.
Newbury Street has become a great way for realtors to generate income, however many store owners have been struggling to manage the soaring rent costs and ability to maintain profits. Furthermore, Boston’s retail scene has been changing in recent years. Established retail stores that would traditionally flock to Newbury Street are finding new opportunities in other fashionable Boston neighborhoods, including Seaport District and Downtown Crossing.
Building values on Newbury Street have increased an average of 29% compared to the average 11% throughout the rest of the city. Commercial property tax rates are based upon building values, leading to increased rents. Financial analysts have linked the empty storefronts to the increased rents.
Despite increasing property taxes and rent prices, storefronts and restaurants located on Newbury Street enjoy enormous advantages. Back Bay’s Newbury Street is one of Boston’s most famed tourist destinations, and attracts large amounts of foot traffic. Newbury Street also commands considerable amounts of foot traffic and attention around the holiday season. Furthermore, a CBRE New England market outlook expects rents to stabilize in 2018.