Activating the Upstairs: How Main Street Organizations Can Support Upper Story Development
Keith Winge | January 29, 2026
Over the past year, the Missouri Main Street Connection’s Outreach Committee studied the potential of upper floor housing. Their work highlights how activating these often-underutilized spaces into housing can strengthen both the economic vitality of downtown districts as well as the broader community. This article presents a portion of their findings and ongoing efforts to encourage more Main Street buildings to embrace housing as part of a sustainable downtown strategy. Additional updates and expanded resources on MMSC’s Outreach Committee’s Housing initiative are anticipated in 2026.
The Challenge and Solution
Across the United States, communities both large and small face a dire housing shortage, estimated by Freddie Mac at 3.8 million units nationally. Main Street districts and historic downtowns are emerging as critical areas for addressing this crisis, particularly by activating the vast inventory of vacant space sitting above ground-floor commerce. Main Street America research confirms this opportunity: 95% of districts have vacant buildings, and a staggering 93% have vacant upper floors that could be converted to residential use.
For Main Street organizations, promoting downtown housing is not simply a public service, it is a fundamental strategy that strengthens revitalization efforts. New residents serve as natural patrons of local businesses and generate increased revenue that supports extended store hours and improves business survival rates. This transition turns areas from merely “daytime business districts to a complete neighborhood,” as seen in Emporia, Kansas, which also led to elected officials becoming more focused on enhancing the downtown core. Additionally, utilizing existing infrastructure through upper-story development is an economically sustainable approach for local governments, as it avoids the cost of building new streets, water, or sewer services.
The Blueprint for Upper-Floor Housing Development
The complexity of these small-scale, adaptive reuse projects requires Main Street programs to function as conveners, navigators, and visionaries. Successful development hinges on a comprehensive strategy addressing municipal alignment, technical hurdles, and financial support.
I. Laying the Strategic Foundation
- Understand Your Assets and Market: Leaders must compile an inventory of existing built assets, including ownership details, occupancy status, and zoning classification, thereby becoming the “go-to source” for real estate information. A housing market study is critical to validate the vision, assess demand, and determine likely rent prices, providing developers and finance professionals with the information needed to make a project “pencil out”.
- Cultivate Homegrown Developers: Because successful downtown housing often relies on small, community-committed projects, Main Street organizations should nurture “homegrown small-scale developers”. These are often local property owners or entrepreneurs who are invested in the quality and long-term outcome of the community. Property owners are small business owners, and they should be part of the equation when talking about supporting small business owners in our Main Streets and downtown districts.
II. Overcoming Regulatory and Financial Barriers
Historic buildings inherently face difficulties related to building codes (such as egress, fire protection, and ADA access), making development “prohibitively difficult”.
- Regulatory Reform and Partnership: Main Street organizations should familiarize themselves with the International Existing Building Code (IEBC), which is designed to ease compliance for existing structures. Advocating for its adoption or utilization is key. It is crucial that Main Street programs establish a strong relationship with the City and the Building Code Official, ensuring they share a vision for reuse. Organizing an onsite “code team” bringing planning, development, codes, and engineering staff together with developers can shorten project timelines and eliminate uncertainty before construction begins. In smaller towns with limited city staff, it could include the building/codes person, the mayor, and developers.
- Incentivizing Development: Financing complex rehabilitations requires layering capital. Essential incentives include Federal and State Historic Rehabilitation Tax Credits (HTCs), which offer significant credits on qualified expenses. Locally, programs can utilize Tax Increment Financing (TIF) to capture new tax revenues for improvements or create a local Revolving Loan Fund with favorable terms to spur housing production. Missouri has a great tool, Chapter 353 tax abatement, which is controlled by the city council, holds tax rates at their current rate, and abates the property tax on the improvements to help the property owner finance the development.
Through strong local revitalization programs, patience, determination, and indispensable financial and technical assistance, these projects create a powerful ripple effect. By focusing on these core areas of support, Main Street leaders ensure that activating upper floors becomes a sustainable legacy for the heart of the community.
1 thought on “January 29, 2026 – Activating the Upstairs: How Main Street Organizations Can Support Upper Story Development”
Thanks for this helpful information for getting started on increasing upper story housing on our communities. I can think of a number of spaces in my town that would be great apartments. Let’s get our key players interested in making this happen.