Even before Covid-19 shut down Chicago’s economy, the retail sector was suffering.
The vacancy rate in the Loop rose to 14.9 percent last year, up from 13.7 percent in 2018, according to retail brokerage Stone Real Estate.
Those numbers will be even worse in 2020.
“There’s going to be pain, and people are going to get hurt,” Stone Principal John Vance told Crain’s. “The pain and the hurt for the most part will be across the board. I think it will be for hopefully less than 12 months.”
The Loop’s landlords will be particularly vulnerable to losses that bars and restaurants face in the era of social distancing, even after Gov. J.B. Pritzker’s stay-at-home order is rescinded.
A potential silver lining is that with limited demand, rents will fall and construction costs for build-outs will also drop, Vance told Crain’s.
Bloomberg reported last week that some retail owners collected as little as 15 percent of what they were owed.
Landlords, facing potential defaults of their own, are telling large corporate tenants that they won’t be getting any breaks. Others say the federal government should step in and cover the costs.
“The landlords are triaging the battlefield,” said Gene Spiegelman, vice chairman at Ripco Real Estate Corp. “The super powerful and strong are not going to get any help and the ones that’ll die anyways, landlords will say why would I help them?”
Vance told the outlet that he didn’t expect a “V” shaped recovery in Chicago.
“Hopefully, it’s a U and not an L,” he said. [Crain’s] — James Kleimann