“Whoever said money can’t buy happiness simply didn’t know where to go shopping.” –Bo Derek
Whoever said that simply didn’t know about prime urban corridors. These nationally recognized shopping districts, both existing and emerging, are propelling brick and mortar retail into the 21st century, featuring high-tech homages to the brands we love and those we’re just getting to know.
Chicago’s top 5 retail corridors cater to a broad audience of tourists and locals, some placing a premium on luxury while others prioritize value and convenience. Just in time for ICSC RECon, we chatted with top JLL Chicago Retail brokers about each corridor’s inner workings.
Riverwalk redevelopment pulls Michigan Avenue tenants south
Retail expert: JLL Vice President Peter Caruso, leasing agent at 909 N. Michigan Avenue. Caruso recently leased 10,000 square feet to Canada Goose in the Park Hyatt Chicago.
Mag Mile matures: Chicago’s prized retail corridor is evolving alongside the entire retail industry. With more than 30 million visitors a year from around the world and rents still at a discount to the coasts, Michigan Avenue is at a crossroads and some prominent vacancies present generational opportunities. Landlords are in a unique position to catch the next wave of retail, and from the looks of it that’s technology, electronics and discount apparel.
South Michigan beckons: Popular storefronts are now stretching toward Grant Park, spurred by Apple’s under-construction concept at 401 N. Michigan and the newly redeveloped Riverwalk.
Rents hit high watermark: Michigan Avenue rents are the highest they’ve ever been, but it’s a wide range. The most expensive spaces could be $600 per square foot while the largest ground floor spaces could run as low as $375 per square foot. I expect an uptick in nontraditional, historically virtual retailers circling the submarket and evaluating opportunities for splashy, interactive flagships.
State Street shoppers seek affordable apparel
Retail expert: JLL Associate Joaquin Manriquez
Shop like a local: Chicagoans look to State Street to meet their practical shopping needs. State Street is home to Chicago’s value-driven concepts like Nordstrom Rack, Saks Off 5th and a new Banana Republic Factory concept is set to open in late 2017. Mass market retailers such as Urban Outfitters and H&M also maintain flagship locations in the corridor.
Reinventing upper-level retail: Investors and developers are starting to find non-traditional concepts to occupy upper-level vacancy. Georgetown Co., which purchased the well-known Loop Gap at 35 N. State for $23 million in 2011, announced in early 2017 that it will demolish the store and develop a high-rise boutique hotel in its place. Block 37 is anchored by a fourth-floor AMC Dine-in Movie Theater and Latinicity, a Latino-centric food hall occupying third-floor space.
The future of Macy’s? A mainstay of the corridor, the 11-story Macy’s flagship at State & Randolph cohabits well with nearby affordable fashion tenants. Look for part of that space to convert to residential or office as the retail giant plans for the future.
New Oak Street corridor retailers attract twenty-something shopper
Retail expert: JLL Vice President Jose Gonzalez
Forever Oak Street: There are few retail areas in Chicago that are recession proof. Oak Street in the Gold Coast neighborhood is at the top of the list. It will remain the high street retail destination for locals and tourists, but it’s also gaining a younger audience with new, affordable retailers from Shinola to Aritzia.
Luxury lite: Today’s young shoppers with disposable income are more likely to buy across price points. While luxury and couture brands like Armani, Hermes and Prada are iconic, the convenience of having more economical staples nearby adds to the corridor’s appeal as a one-stop shop.
By the numbers: Thriving with rents pushing north of $350 per square foot, Oak Street is attracting investors willing to pay a premium for a top high street location. Sales like 1100 N. State St. (new Urban Outfitters, steakhouse Maple & Ash), sold for $53.2 million to STRS Ohio—a 4.5 percent cap rate—last year, represent this aggressive pricing that is likely to continue as Oak Street’s tenant mix evolves—though space is limited!
Wicker Park’s local charm makes national waves
Retail expert: JLL Associate Zac Lewinski
Why Wicker? Wicker Park has always been attractive to more hip, edgy retailers. It’s a great branding opportunity and there are synergies with other trendy brands – there’s nothing wrong with being hip by association. Retailers from Steve Madden to Free People like the vibe, it’s less prim and proper and it’s where their fast-growing, millennial customer population wants to go.
Deal 411: JLL Senior Vice President Jason Trombley and I just represented Rapha Chicago, a community-focused bike shop, which opened a 2,500 square-foot space on Milwaukee Avenue, the “Hipster Highway.” In addition to high-end bike-wear, Rapha hosts group rides, charity events and serves morning coffee for bike commuters.
What’s next? With reasonable rents in the $50 to $100 per square foot range, Wicker Park remains a proven target market for both local and out-of-state retailers. It’s approachable and national and local investors are still buying and developing. Hot restaurants like Publican Anker keep popping up along Milwaukee, North and Damen and The Robey hotel is starting to attract a tourist population that used to have nowhere to stay.
Dining is the engine of growth for Fulton Market
Retail expert: JLL Vice President Adam Cody
Let’s eat: The Fulton Market dining scene is extremely competitive and the local mainstays are being challenged. You’re now seeing multiple concepts in each category and across price points, from fried chicken to fine dining. With 36.6 percent population growth since 2010, not to mention a booming daytime pop bolstered by the likes of Google and McDonald’s, the demand is there.
But where can we shop? Commitments from retailers like Anthropologie have led to an uptick in interest from soft goods, but they’re taking a wait-and-see approach. They want to see sustained success—with asking rents at or near triple digits, you have to do high volume. Retailers I’m touring with, both restaurants and apparel, are considering Fulton Market but more often than not have gone with the “safe” choice (Wicker Park, Southport, etc.).
Good luck buying land: Fulton Market’s industrial properties are trading at eye-popping prices. These land values make pure retail impossible, since you have to go vertical to justify costs. Expect more mixed-use, with retailers getting creative in terms of co-tenancy and building structure.
Download JLL Retail’s full report on Chicago’s prime urban corridors here.