Chicago-area retail isn’t out of the woods yet

The local vacancy rate dropped to 10.7 percent in Q4 2019, but it’s still nowhere near the post-recession low of 8.6 percent in 2013

Chicago /
Feb.February 06, 2020 12:11 PM
Chicago Area Vacancy Rate Continues Decline

Chicago area vacancy rates have continued their decline.

The Chicago area’s vacancy rate has dropped to its lowest point in two years after falling for three consecutive quarters, but it’s still got a ways to go before it nears the post-recession low.

At the end of 2019, the local vacancy rate dipped slightly to 10.7 percent in the fourth quarter, from 10.9 percent in the third quarter, according to CBRE’s Chicago office.

Amid the rise in e-commerce that’s caused brick-and-mortar to flounder, some landlords are turning to non-traditional tenants, including health care, restaurant and fitness, as they grapple with retail vacancies, Crain’s reported.

One of the fourth quarter’s biggest leases involved 24 Hour Fitness taking over a 40,000-square-foot space formerly occupied by Dania Furniture store in the Algonquin Galleria shopping center.

Even though the lower local vacancy rate shows signs of progress, it remains significantly higher than it was in 2013, when the vacancy rate plummeted to 8.6 percent.

Brick-and-mortar retailers have been forced to permanently close their doors as customers have been lured towards the ease offered by their online competitors, namely Amazon.

More than 9,200 stores closed across the U.S. in 2019, compared with 5,844 closures in 2018, according to New York-based Coresight Research.

Brick-and-mortar brands that once dominated retail, including Forever 21 and Express, are closing left and right.

This week, Macy’s announced that it would be closing 125 of its weakest locations over the next three years.

Shopping malls, which aren’t included in CBRE’s report, have also been struggling.

In an analysis of the sector’s growth prospects, California-based research firm Green Street Advisors ranked Chicago-area shopping centers 47th out of 50 major U.S. metro areas. The report forecast a 2.7 percent decline in the key growth metric accounting for occupancy and rent from 2020 to 2024. [Crain’s]Brianna Kelly


Related Articles

arrow_forward_ios
2731 N. Elston Ave (Google Maps, iStock) REIT, Shopping Center
REIT buys mall from construction company for $29M
REIT buys mall from construction company for $29M
Silvestri Investments' Dan Silvestri and 737 North Michigan Avenue (Google Maps, Silvestri Investments, iStock)
Mag Mile sale for $94M shows where stability lies as pricing adjusts
Mag Mile sale for $94M shows where stability lies as pricing adjusts
Chicago's Wicker Park (Google Maps, iStock)
Shuttered Wicker Park bar says it was “scapegoated” by cops
Shuttered Wicker Park bar says it was “scapegoated” by cops
Donald Trump in front of the Trump International Hotel and Tower Chicago (Trump Organization, Getty Images, iStock)
Cook County hikes Trump Tower property taxes
Cook County hikes Trump Tower property taxes
JLL's Amy Sands and Christopher Knight with 737 N. Michigan Avenue (JLL, Google Maps)
Home to Neiman Marcus’ flagship store on Mag Mile sells
Home to Neiman Marcus’ flagship store on Mag Mile sells
Brixmor' Ppresident of the midwest region John M. Hendrickson with the North Riverside Plaza in Riverside and Elmhurst Crossing in Elmhurst (Brixmor, LinkedIn)
Brixmor raises bet on Chicago-area retail by more than $100M
Brixmor raises bet on Chicago-area retail by more than $100M
A photo illustration of the Palmolive Building at 919 North Michigan Avenue (Google Maps, iStock)
Louis Vuitton’s Mag Mile landlord to sell retail portion of the building
Louis Vuitton’s Mag Mile landlord to sell retail portion of the building
Fulton Market (Loopnet) Chicago
Fulton Market office, retail portfolio sells for $33.5M
Fulton Market office, retail portfolio sells for $33.5M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...