A giant novelty check celebrating the first round of grantees under the city of Boston's SPACE business assistance program is seen before a press conference on July 26, 2023. Photo by James Sanna | Banker & Tradesman Staff

Boston Mayor Michelle Wu announced the distribution of $2.8 million in grants to city small businesses Tuesday, with the aim of helping them expand downtown.

The SPACE program is using federal pandemic aid to help businesses pay between $40,000 and $200,000 worth of start-up expenses like lease payments and build-out of vacant storefronts.

The program is part economic opportunity generator, administration officials said at a press conference Wednesday morning announcing the 24 businesses either launch their first brick-and-mortar location or add an additional location, and part of an effort to help revitalize downtown by making it a destination for the office workers who continue to stay home in droves. The city’s partners in the downtown Business Improvement District, Eastern Bank, Bank of America and Citizens Bank will also offer grantees resources, and the city itself will be offering “wraparound” technical assistance with lease negotiations and ore.

By catalyzing brick-and-mortar businesses with established followings from the city’s other neighborhoods to open outposts downtown, Wu and economic development chief Segun Idowu said, the city will generate excitement that will draw more foot traffic downtown.

“It’s really important the range of [retail] options reflects and is welcoming to and empowering the full range of people in Boston,” Wu said.

Wednesday’s grant recipients ranged from a skin-care boutique offering “express facials” to the city’s first new LGBTQ nightlife venue in years, and 50 to 60 stores could ultimately open in successive rounds of the SPACE program. These new shops and restaurants, Idowu said, will also be accretive to office tenants’ efforts to get their workers back downtown and work city officials and office landlords are doing to try and keep those tenants in place despite rising vacancy rates.

“Announcements like this are part of an effort to get people to stay, to show them that there’s a reason to stay,” Idowu said. “We want to turn downtown into a class A space.”

But the SPACE effort faces obstacles. Some of the grant recipients are still looking for space to lease, and it’s an open question of whether downtown retail rents will fall far enough to allow new businesses to succeed when the traditional mainstay of downtown retail consumption – office workers – still hasn’t returned to pre-pandemic levels.