|
2007 Chicago Loop retail analysis
Loop retail vacancies edge up
After falling two straight years, the retail vacancy rate in the Loop rose slightly last year, largely because of the addition of 200,000 square feet of new space.
The rate rose to 14.9% from 14.6% in 2006, according to a new report by Chicago-based real estate brokerage firm Stone Real Estate Corp.
Given the new space, producing an almost 6% increase in the market, the fact that vacancies rose only slightly is evidence of strong demand from retailers, says John Vance, a senior associate with Stone Real Estate. (Stone's report counts space that is being marketed but is not yet built or occupied.)
The Loop's growing tourist traffic and residential sector, Mr. Vance says, mean things won't slow drastically this year — even if there is a recession. "I don't think the Loop is in any danger because the market is so healthy right now," he says. "Take 108 N. State (Block 37). That's one of those projects that if a retailer is cutting from 20 new stores to eight stores, that project may be one that survives because there's a lot of momentum and strength there."
COMING SOON
In the Michigan Avenue corridor, the vacancy rate was unchanged in 2007 at 23.5%. The rate dropped to 9.4% from 13.2% in the LaSalle-Wacker corridor, and it rose to 13.6% from 9.1% in the Central Loop — where more than half of the new supply was added as leasing began at 108 N. State and at the former Carson Pirie Scott & Co. store at 1 S. State.
Joseph Freed & Associates LLC is developing both projects. At 108 N. State, a four-level complex with 280,000 square feet of retail and restaurant space opening late this year, Freed has announced five tenants: apparel retailer Club Monaco, a Muvico Entertainment LLC theater, a David Barton Gym, a Rosa Mexicano restaurant, and a coffee shop and yet-unnamed restaurant by Chicago-based Lettuce Entertain You Enterprises Inc.
The Stone report counts the project's first-level retail space, about 56,000 square feet.
The former Carson's store, now known as Sullivan Center, amounts to 63,690 square feet of first-level retail space, while another large addition to the market was 30,000 square feet in the Lake Shore East residential complex.
Notable deals in the Loop last year included Ulta Salon Cosmetics & Fragrance Inc. opening a store on State Street, while Chicago-based Argo Tea added two new Loop locations. Six bank lease deals were signed, including two mid-block branch locations, a signal that prime corner sites are hard to come by, Mr. Vance says.
He says there weren't many blockbuster deals in 2007, and pointed to a small, 1,400-square-foot lease as indicative of the Loop's arrival as a so-called work-live, 24/7 market: Pastoral Artisan Cheese Bread & Wine at 53 E. Lake St.
The owners of the three-year-old Lakeview business weren't considering the Loop, figuring they'd open a second store in another small, upscale neighborhood, says co-owner Greg O'Neill. But they were approached about the site, part of Village Green Cos.' MDA City Apartments, by Village Green executives. Mr. O'Neill and his partner were won over by the Loop's market statistics — such as pedestrian traffic counts and the growing population.
Since opening in October, the store has exceeded expectations, he says. "It's certainly a very attractive market for us on three levels: You've got the emerging residential, all the business-to-business, and then you've got the tourist trade with all the hotels," he says. "We did a little homework, and there was no reason not to do it."
©2008 by Crain Communications Inc.
Close
|
