As retail sales and consumer confidence continue to climb, the Chicago retail real estate market has seen a bump as well, according to CBRE’s Q3 Chicago Retail Report.
The third quarter showed positive activity with the vacancy rate decreasing 70 bps to 9.3 percent and net asking rents rising from $17.91 to $18.07.
A lot of the activity in the Chicago market has been attributed to the grocery sector, with Mariano’s adding four new stores to the market recently–one in Northbrook, two in Glenview and one in Lincoln Park.
Fresh Thyme Farmers Market simultaneously delivered three new Chicago area stores in mid-October.
- 2500 North Elston Avenue in Lincoln Park
- 5340 Northwest Highway in Crystal Lake
- 790 Royal Saint George Drive in Naperville
Bob’s Furniture also made a big push into the Chicago market with four leases in the suburbs in Schaumburg, Villa Park, Aurora and Skokie.
Much of this activity is still being driven by the effects of Dominick’s exit from the Chicago market, as now second and third tier locations are drawing attention.
“I believe you saw a big push for the most desirable Dominick’s locations when they initially came onto the market and now you will start to see some of the remaining sites get picked off here and there,” said Adam Foret, Associate with CBRE. “Some landlords are just now getting back control of these sites and are able to structure deals that weren’t possible before. Also, many grocers are seeing an opportunity where they haven’t in the past. While it seems like the market can’t possibly accommodate any more grocers, I don’t think they will slow down anytime soon. They all believe their concept is better than the competition’s and that they can attract their specific customer base.”
Nationally, indicators were positive, perhaps boosting the confidence of landlords to continue to drive rents.
- August retail sales, excluding autos, gas and restaurants grew 0.2 % seasonally adjusted from July.
- Nationally, the retail industry added 18,700 jobs in September.
- Back-to-School spending is expected to reach $24.9 Billion
“We continue to see consistent activity from the furniture category as Bob’s Discount Furniture, Art Van and Ashley’s have all made recent pushes in the market,” said Foret. “I believe we will continue to see a slight increase in rents and a minor decrease in vacancy rates. Landlords now know their sites and where they can demand higher rates and where they need to cut a deal to induce a tenant.”