Loop Retail Vacancy Ticks Down Again

Retail vacancy in the Loop fell for the second straight year in 2025, offering a modest but meaningful signal that the central business district is clawing its way back from the pandemic-era wipeout.

The Loop’s retail vacancy rate dropped to 28.5 percent in 2025, down from 29.8 percent the year before, according to a report from Chicago-based brokerage Stone Real Estate. Crain’s reported that after years of shuttered storefronts and stalled leasing, the market appears to have hit bottom. Stone principal John Vance told the outlet that renewed activity in key corridors and a slow return of foot traffic contributed to that observation.

State Street, long the poster child for downtown retail distress, has been a bright spot. A new Gap Factory store at 17 North State Street and a high-profile lease by Barnes & Noble at 150 North State Street helped chip away at vacancies on the corridor, even as some big names continued to leave. The deals suggest retailers with an existing foothold downtown are seeing enough sales to double down, Vance said.

Gap’s return comes eight years after the company closed its flagship State Street store. Vance said the move likely reflects steady performance at the Banana Republic Factory inside Block 37. Barnes & Noble’s lease — one of the largest State Street has landed in years — also turned heads.

“That’s what momentum does, whether it be bad or good,” Vance said. “And right now we’ve got some good momentum.”

The picture isn’t uniformly rosy. State Street lost Saks Off Fifth and Anthropologie in 2024, and the vacancy rate remains elevated. More broadly, the Central Loop submarket saw its vacancy rate fall to 24.7 percent from 26 percent a year earlier, according to the report.

Elsewhere downtown, leasing followed the office workers. In the LaSalle/Wacker corridor, improving office occupancy helped draw food-and-beverage tenants to the bases of well-capitalized towers. New arrivals included a butcher shop at 222 North LaSalle Street and fast-casual chains Cava and Mendocino Farms in Willis Tower, according to the publication. That submarket’s vacancy rate dropped to 26.8 percent from 28.6 percent.

Along Michigan Avenue south of the river, tourist-oriented concepts drove most of the activity, including Portillo’s and a Hello Kitty-themed café at 360 North Michigan. Even so, the corridor’s vacancy ticked up to 27.8 percent after a CVS closed at 300 South Michigan.

— Eric Weilbacher