While the space downtown is certainly beginning to diminish. The bigger issue with urban retail is getting the retail itself to agree to come downtown (as opposed to Rivertown, 28th, Knapp and now "the Village"). They really need to see a catalyst to view the area as a viable entrepeneural opportunity and a huge flux in condos is not going to cut it.
Unfortunately, if "the Village" is a go then all those stores will never agree to come downtown (until their lease is up) because of the proxmity. We then have a tougher challenge of finding alternatives.
If I were to do a shopping district, I would put it behind the vanAndel arena along 131 between Oakes and Cherry. This way it has a presence from the highway, link to the GR skyway, connection to Ionia corridor and the monroe center corridor. I would use existing buildings and connect them with indoor/outdoor courtyards.
All underground parking too with a trolley or streetcar to bring folks to other parts of the city.