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Chicago Retail Adjusts to Influx of Big-Box Closures
The wave of store closures over the past several years has begun making an impact on Chicago’s retail market, Marcus & Millichap reported. Space is being absorbed more slowly than in prior years, especially since empty big-box stores require larger format retailers or even several smaller vendors to occupy the entire block.
“Substantial vacancy decreases witnessed in previous years are turning into minimal movements as the market adjusts to the influx of available space,” according to the firm’s second-quarter report. “This has reduced the need for new construction and has weighed on rental gains.” That said, rents did gain 2% year-over-year, exceeding the sub-1% five-year average.
An exception to the slower pace of retail development has been Chicago’s CBD. Marcus & Millichap cites the inflow of downtown jobs, which is bringing developers to the core as they look to capitalize on the infusion of new household formation.
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