Chicago Retailers Rein in Suburban Expansion Plans, Pursue Urban Locations
Density and dollars are drawing retailers back to Chicago’s urban neighborhoods. They are responding to the downturn in the economy by reining in expansion plans in the suburbs in favor of pursuing locations that have opened up in the Loop and North Side neighborhoods. These areas continue to attract residents, employees, and tourists, all of whom generate a steady flow of foot traffic, explains Gary DeClark, managing director of Integra Realty Resources-Chicago.
Vacancies across the Chicagoland market have increased in 2009, growing to 11.6 percent at the end of the second quarter, from 11 percent during the first quarter, according to CB Richard Ellis. Net asking lease rates dropped even further to $15.95 per square foot from $16.40 per square foot in the first quarter. This isn’t the case within city limits, though, as urban neighborhoods are outperforming the suburbs. The City North submarket, which CBRE defines as the Loop and Chicago’s inner neighborhoods, posted the lowest vacancy rate in the region at 6.3 percent. It also had the highest rents, ranging from $22.74 per square foot to $27.21 per square foot.
However, some luxury sections, like Armitage Avenue, a strip of trendy boutiques and upscale restaurants on Chicago’s North Side, have seen increasing vacancies, and many retailers are taking advantage of these conditions to leave the suburbs and relocate in pricier areas of the city. Other retailers that already have a presence in Chicago are also upgrading their locations. As a result, retail leasing activity in the Loop and near North Side neighborhoods is rising, with even average urban locations gaining popularity.