Chicago’s strengthening economy, including continued employment gains and growth in the housing market, is fueling increased retailer demand. Demand for retail space has picked up with just over 2 million square feet of shopping center space expected to be completed this year. According to the Federal Reserve Bank of the Seventh District, as of July 2015, commercial real estate construction activity increased moderately. This matches an equally moderate growth in consumer spending.
“Class A space is really tight; Class B space is plentiful; but you can’t give away Class C space,” said Ken Galvin, senior vice president and co-market leader in SRS’ Chicago office.
Retail tenants coming in to the market are, for the most part, concentrated into a handful of categories. “Traditional merchandisers are still very careful about physical store expansion vs. internet investment, so most of the action remains in food, fitness and services,” said Galvin.
Some retailers that are new to the market include Cinepolis, 18|8 Fine Men’s Salons, build-your-own-pizza concepts like Blaze Pizza, Mod Pizza, Pie Five and 800 Degrees, Nando’s Peri Peri, and Bob’s Discount Furniture.
Grocers in particular are picking up expansion pace in the area including Mariano’s Fresh Market, Aldi, Whole Foods and Fresh Thyme.
Retailers that are already in the market and adding stores are mostly small shops including Starbucks, Noodles & Company, Chipotle, Naf Naf Grill, Roti, Epic Burger, Flywheel and Soul Cycle.
New construction is mostly limited to build-to-suit projects and small two- to three-tenant buildings. There are, however, a handful of larger projects in the works, according to Galvin.
Arlington Downs: New retail construction opening in the summer of 2016. Development includes a 151 room hotel, 655 luxury apartments, 125,000 square feet of retail and restaurant space including a luxury dine-in cinema, a 55,000 square foot indoor water park resort, hotel and five regional soccer fields.
New City: Transit-oriented development currently under development. Includes 199 luxury residential units, 363,000 square feet of entertainment, retail and restaurant space including Z Gallerie, Mariano’s Fresh Market, Dick’s Sporting Goods, Arclight Cinema, Evereve, James & Sons Fine Jewelers and It’Sugar, and 28,000 square feet of medical office space.
Evergreen Plaza: Evergreen Plaza Mall, built in 1964, is being torn down and replaced with this outdoor shopping center. With availability starting in the summer of 2017, the project will feature a 120,000 square foot Carson’s store, a big box sporting goods retailer, a national organic grocery store, and several other retailers. All in all, the Chicago market, like many other large metro areas, is stable with a strengthening economy resulting in increased retail activity.