Although the 1930s Depression undoubtedly cooled the expectations of New Rochelle's residents and officials, the city's downtown remained prosperous into the 1970s. The engine of that wealth was, to a large extent, its vibrant retail environment, which earned New Rochelle a reputation as one of the New York suburbs' most important shopping and entertainment destinations.

"This was the downtown of Westchester," according to Marc Jerome, chairman of New Rochelle's Business Improvement District, which was approved in 1999. "If you talked to anyone in the '50s, New Rochelle was the place people went to. People have been pining for the old days."

Although a magnet like few other suburban locations for upscale retailing, by the mid-'70s, New Rochelle was being passed by. As one longtime resident recalled of Bloomingdale's, which opened downtown even before the 1950s boom in suburban department store building, "Bloomingdale's took over the very old Ware's department store on Main Street. The store was instantly a big draw and the magnet that drew people to New Rochelle. Main Street blossomed. Stores and restaurants thrived. It was a terrific time for the city, but in 1975 Bloomingdale's built a large, very modern store in White Plains, and in 1976, the New Rochelle store was closed, and Main Street slipped into a decline."

By 1991, the downtown retail environment had badly eroded, according to Mitchell B. Kessler, a Columbia graduate student who wrote his real estate development master's thesis on the New Rochelle Mall in 1991. The downtown mall, anchored by a Macy's branch, opened in 1968 as the "centerpiece of the Cedar Street Urban Renewal plan," with nearly 600,000 square feet of retail, a supermarket, and duplex cinemas. By 1991, Kessler would report, "there has been little improvement to the city since the New Rochelle Mall opened." He added that "the city's tax base is barely treading water," despite the $824,340 the mall generated for New Rochelle annually. Although there were 500,000 people living within a five-mile radius of downtown, Kessler argued that New Rochelle's comparative disadvantages made it "impossible" to compete with White Plains, and that "New Rochelle's reputation as a merchant town in the mid-60s to early '70s, according to residents, has dwindled due to fear of crime, the closing down of major department stores, consistently below-average merchant mix, and stiff competition from the Galleria and White Plains Mall." After operating on life support for a decade or so, Macy's and the New Rochelle Mall closed in the mid-'90s.

In a 1995 thesis, another Columbia graduate student, Jennifer M. Campion called New Rochelle a "victim of economic decay." That year, 400,000 square feet of downtown retail space sat vacant. Campion described New Rochelle's 30% loss in tax ratables between 1985 and 1995: in 1988, the city's taxable assessment roll was at $400 million, but by 1994, it had declined to less than $340 million. (New Rochelle's adopted 2000 budget was $75.1 million.) School taxes doubled during this period to make up the revenue loss. In addition, declining federal and state aid, and an aging and less wealthy population, added to the city's troubles.