Amidst a strengthening retail market in Chicago, market drivers have shifted, as restaurants, entertainment venues and specialty fitness studios have become the main source of activity and growth in the retail sector. Outside of the main retail drags on high street, it has become a more challenging market for traditional retailers. That’s not to say retail is hurting in Chicago—far from it—but as rents continue to rise and retailers rethink their brick and mortar strategy, nontraditional sources of retail will continue to lead the way.
“High-street will always have strong interest from retail tenants, but surrounding neighborhoods are finding it more difficult to attract quality retailers as rents have escalated in recent years and the internet continues to take its toll,” said Kim McGuire, Senior Vice President with CBRE. “However, in lieu of traditional retailers, landlords have been able to ll space with restaurant and entertainment venues, as this market has remained very strong in neighborhoods such as Streeterville, River North and Old Town.”
McGuire points to the recent leases from SPiN at Marina City and Bounce at 111 W. Wacker Dr., two upscale ping pong clubs, and True Foods, with a Barry’s Boot Camp on the second floor, as prime examples of this trend. The city’s restaurant scene is thriving as well, with Chicago now recognized as a culinary destination. Dozens of new restaurants from award-winning chefs open in the downtown area and surrounding neighborhoods each year.
“People who live, work and visit the city go to restaurants and entertainment venues” said McGuire. “As a result, this portion of the market has been thriving.”
SPECIALTY STORES ACTIVE IN SOME NEIGHBORHOODS
Yet there are still areas where specialty retail stores are making an impact and have been successful. According to McGuire, neighborhoods on the North Side, such as Bucktown and
the Southport corridor have had success luring specialty retailers and have become shopping destinations for city dwellers.
Retailers such as Fjallraven, TOMS and Shinola have recently opened in Bucktown neighborhood. A J. Crew has opened in the Southport corridor with a Soul Cycle on the second floor.
Overall though, it has not been the best market for retailers to find quality opportunities.
“We’ve seen pockets of success with retailers outside of the high-street locations, but for most, rents are a bit too high right now,” said McGuire. “That may shift in the coming years, but, for now, restaurants, nightlife options and specialty fitness operators are leading the leasing activity.”
FULTON MARKET BUILDING UP
The market poised for the most growth in the coming years is likely to be the Fulton Market area in Chicago’s Far West Loop.
In recent years, the neighborhood has seen a drastic change, with major corporations taking loft office space and redevelopment sites, and, new residential development. This activity has driven up the area’s daytime population and increased its affluence. Investors from across the country have now flocked to the scene and buildings have been trading at a torrid pace. Many of these properties will be repurposed as retail.
“This area has long been one of Chicago’s top dining and restaurant destinations,” said McGuire. “But with this new capital coming in, especially from New York, we will start to see some large retailers make a play in the area.”