After a 2018 that saw a record low for shopping center construction, the Chicago retail market is in line for an even bigger dropoff in new shopping center space.
Developers are on track to add less than 600,000 square feet of shopping center space in the market this year, according to a report from Mid-America Real Estate, cited in Crain’s. That’s a drop of nearly a third from 2018’s record low of 870,000 square feet, according to the report.
Those numbers mark lows below even the worst year of the recession, when only 1 million square feet was added, and a dramatic dropoff from the peak in 2007, when 8.4 million square feet was built, according to Crain’s.
The reduction in new shopping center space is of little surprise as the toll of e-commerce has led to rising retail vacancy rates, which hit an eight-year high in the Chicago market last year. Downtown’s retail vacancy ended 2018 at its highest level since 2011.
That’s led shopping center landlords to get creative with vacant space, adding non-retail uses like medical centers, co-working spaces, business offices and even residential projects. Such repurposing and “densification” efforts could be the key to large retail properties’ survival, experts say. [Crain’s] — John O’Brien