Chicago is the nation’s largest retail market, containing more than 500-million-square-feet of retail space. But, tight retail vacancy rates on Chicago’s prime streets, like Michigan Avenue, are leading retailers to expand throughout the city. Retail sales growth prospects have become increasingly attractive and obtainable in the Windy City, with consumer spending now back to pre-recession levels with nearly four percent annual growth since 2010.
A tighter market makes sense given the disposable income for a typical Chicago household exceeds the national average by more than 10 percent, and the population has higher consumption habits for most retail goods.
“When we look at potential consumer demand against the market’s existing retail supply, we found expansion opportunities exist across every retail segment with the exception of electronics/appliance retailers and personal care stores,” said Larry Kilduff, Chicago Retail Market Lead, JLL. “The region’s wide demographic spread positions retailers favorably across diverse consumer segments in the metro area.”
Strong sales figures translate into new and expanding retail demand, and JLL’s experts point to new submarkets that are now catching the eye of domestic, and increasingly foreign, brands looking for local expansion.
- Urban, edgy Rush Street, between Walton and Cedar, known as the luxury district is lined with flagships of high-end fashion retailers like Versace, Prada, Hermes and Christian Dior, and upscale restaurants like Fig & Olive and Del Frisco. The majority of the small-store formats are seeing average asking rents jumping north of $200 PSF*.
- Where North Avenue, Clybourn Avenue and Halsted Street intersect makes up the retail district is in the heart of Lincoln Park. The street is like a deconstructed power center, with big name, every day retailers like J. Crew, Sephora, Forever XXI and Crate and Barrel. Once retailers leave Michigan Avenue, it’s the logical place to expand, given the accessibility to Lakeshore Drive and I-94. Here rents tend to be more affordable, compared with Michigan Avenue or Rush Street, reaching $70 PSF*.
- Outside of the central city, Bucktown near North Avenue, Milwaukee Avenue and Damen Avenue intersection is an edgier part of town with a neighborhood feel that attracts young, dual-income couples looking to start families and want something more affordable than the Lincoln Park area. Trendy names that flock to this demographic looking for small shop space, like Toms, Lululemon and Shinola, are finding prime sites with rents hovering around $80 PSF*.
- When it comes to retail, Fulton Street between Halsted Street and Ogden Avenue is the next hot-spot. Whether it takes three or 10 years to transform, we’ll see an evolution similar to New York City’s Meatpacking District, particularly as Google moves its headquarters here. There aren’t many markets where millions of square feet of office and thousands of residential units are coming online. This is a true live-work-play community, and if you aren’t a retail pioneer in this market, you’ll be clamoring for space in the future. Current rents are averaging $60 PSF*.
While trendy, budding areas of the city will continue to attract opportunistic retailers, The Mag Mile will remain a top target for more mainstream expansions efforts. With more than 50 million people visiting a year, it’s a prime spot for retailers who want to plant a flagship, particularly with a resurgence of the South Michigan corridor. Although we haven’t seen the same proliferation of flagships as its northern half of Michigan Avenue, between the Chicago River to Oak Street, it’s turned into a restaurant, tourist and residential haven that host seven-days-a-week traffic thanks to Maggie Daley and Millennium Parks, Navy Pier and the Art Institute. If you’re looking to score a small shop space on the Michigan Avenue, you’ll pay upwards of $450 PSF*.
“Chicago’s retail sales activity is expected to have its best year in more than a decade, driven by the growth of private industries and their impact on the employment rate and disposable spending,” added Peter Caruso, Senior Vice President of Leasing, JLL Retail. “Retailers are flocking to Chicago to lay the ground work for their brands in the Midwest will continue to push the envelope by expanding into new submarkets, especially where condos and hotels are being developed or modernized.”
For more information about Chicago’s retail market visit www.jlllretail.com/news
* Asking rents are typically going to be negotiated