Retail is coming back in Chicago, unevenly, with some neighborhoods outperforming after losses during the COVID-19 pandemic.
The pandemic hit retail shopping especially hard, with many stores closing and nonexistent foot traffic. Now the tenants that did make it through the pandemic are looking to expand, Mid-America Real Estate Group principal Richard Spinell said in an interview with the Chicago Business Journal.
“Rental rates have not fully recovered in some urban markets, which can be attractive to tenants but more challenging for landlords,” he said. “Construction costs are higher now, so building out space to accommodate a new use or refreshing existing space costs more today than before the pandemic.”
Spinell said that leasing activity is picking up generally, and rents are returning to pre-pandemic rates, which he partially attributes to the lack of new retail development during 2021, something that has allowed the market to stabilize.
Speciality retailers were some of the stores hit hardest by the pandemic, in addition to traditional malls, he said.
“Malls and lifestyle centers have lagged the overall market recovery, but we’re starting to see momentum in those segments too,” he said.
On the other end of the spectrum, urban retail, especially in places like Gold Coast, Southport and Fulton Market, continued to perform well during the pandemic and after. The exception to that is businesses within the Loop, where recovery has been slower, given the lack of foot traffic from companies whose employees are opting to work from home.
[Bloomberg] — Miranda Davis
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