Title
Discussion of the Downtown Commercial Vacancy Study
Recommended Action
Committee Recommendation:
Presented to Land Use and Environment Committee on April 23.
City Manager Recommendation:
Discuss the Downtown Commercial Vacancy Study
Report
Issue:
Whether to discuss the Downtown Commercial Vacancy Study
Staff Contact:
Jennica Machado, Economic Development Director, Community Planning and Economic Development, 360.480.9167
Presenter(s):
Jennica Machado, Economic Development Director, Community Planning and Economic Development
Chris Zahas, Managing Principal, Leland Consulting Group
Jennifer Shuch, Senior Analyst, Leland Consulting Group
Background and Analysis:
In recent years, increased vacancy in storefront and office spaces has been observed. The City’s Olympia Strong economic recovery plan included a proposed initiative aimed at helping activate vacant downtown spaces to help address downtown vacancy and vibrancy. That initiative did not gain traction, and efforts were terminated before implementation. As a result, the City identified a need to better understand the causes of vacancy prior to developing policy or programmatic responses.
The City issued a Request for Proposal to conduct a downtown vacancy analysis and identify potential strategies. Following a competitive process, the City selected Leland Consulting Group and began the study in October 2025. Leland completed field surveys, stakeholder interviews, and data analysis to assess existing conditions and contributing factors.
The objective of the study was to provide the City of Olympia with a clear and data-driven understanding of the drivers behind commercial vacancies in downtown Olympia and to identify actionable strategies to reduce vacancies over time. The findings are intended to inform future policy and program development related to downtown economic activity.
The study finds that downtown Olympia commercial vacancy is a prevalent issue, concentrated in specific areas and property types, with older buildings experiencing higher vacancy rates than newer ones. At the same time, downtown Olympia continues to serve as the region’s civic and cultural core, supported by a strong base of independent businesses. The report also notes downtown’s significant progress recovering from the pandemic regarding employment levels and visitor activity.
While there are a variety of factors contributing to vacancy in downtown Olympia, this analysis finds the following as the three major drivers:
• Renovating older buildings is expensive, and the tenant improvements needed to bring them up to modern standards trigger costly requirements related to energy standards, fire safety, and half-street improvements that are not supported by revenue from commercial rents.
• The cost of tenant improvements in new retail spaces is very high, and longer leases are required to amortize the cost of these improvements.
• The state shift to remote work has resulted in a large amount of vacant office space that is both in need of significant upgrades and primarily suitable to very large office tenants. This shift also decreases foot traffic to businesses.
To address these issues, the study recommends focusing on strategies within the next five years that are within City purview to increase activity and reduce barriers to occupancy. These include recommendations regarding city infrastructure and capital investment, policy reform and process improvements, business support programs, customer services, and strategic planning.
Climate Analysis:
The completion of the study does not result in direct greenhouse gas emissions or reductions. The study may indirectly support climate mitigation strategies by informing future policy, program, or investment decisions related to downtown development including potential support for reuse of existing buildings.
Equity Analysis:
Completion of the study does not directly implement programs or policies and is therefore not expected to result in immediate benefits or burdens to specific groups. However, it may inform future decisions that could affect downtown businesses, property owners, workers, and visitors, including historically marginalized and underrepresented communities in economic development efforts. Depending on future actions, there is potential to reduce disparities by improving access to economic opportunities and addressing barriers to business occupancy.
Neighborhood/Community Interests (if known):
No additional concerns were received outside of those identified through stakeholder engagement conducted as part of the study. Community input is summarized in the study.
Financial Impact:
The Vacancy Study was funded through the General Fund in the Economic Development budget for a maximum contract amount of $40,000.
Options:
Discussion Only - No Action Required
Attachments:
Downtown Commercial Vacancy & Vitality Study