Chicago's Torrid Retail Romance
Like a tempestuous relationship—or the Coachella Astronaut that creeped on unsuspecting hispters last weekend—Chicago’s retail recovery is inspired, uneven, and unpredictable. On April 22, we’ll be holding a special Retail Summit to find out where it’ll surface next.
Bisnow Chicago office head Jonathan Hobfoll snapped this pic and can attest to the art installation’s 36’ enormity. But back to retail: Since the downturn, alarmist headlines like “Online Shopping Kills Brick and Mortar” and “Death of the Suburban Mall” have run rampant, so we checked in with some experts to cut to the core of what’s really happening.
1) Key urban street rents through the roof.
Stone Real Estate founder and principal David Stone, just back from London and Barcelona, says empowered landlords in areas like Rush, Oak, or State Street have turned up the heat by jacking up rents to well above pre-recession levels. The question is, are retailers on those hot streets doing the kind of sales to justify those rents? Online shopping has not been the kiss of death many envisioned (it’s very difficult to buy clothing based solely on a website image), he points out, and even online retailers are embracing the high-touch benefits of having some brick and mortar stores along with their websites. Returning clothes after realizing they don’t fit will always be a pain, he says.
Hot tenants of late include Athleta (above) and Lululemon, and specialty eateries like Lyfe Kitchen and Bottleneck restaurants have been surprisingly resilient, David says. He points to River East in Streeterville, where Stone just did substantial leases for Pinstripes and Mrs. Green’s Natural Market, as a recently revved up submarket (Whole Foods is moving into the old Dominick’s, as well). But one factor not being taken seriously enough: this winter was absolutely brutal for retailers, especially apparel, and it might take the rest of the year to bounce back. Maybe it’s a testament to Chicago’s demographics, but a couple quarters of subpar performance hasn’t stopped national tenants from aggressive and strategic local expansion, he notes.