Barnes & Noble's Loop Lease 'Symbol Of The Comeback' On State Street

For years following the pandemic, a walk down State Street told a similar story: temporary signage, dark windows and little visible momentum.

But the hard-hit corridor once defined by empty storefronts and dwindling foot traffic is starting to rewrite the narrative. 

Barnes & Noble’s decision earlier this month to lease 30K SF at the former Old Navy space on State Street, which will be the book retailer’s largest Chicago location, represents more than just an isolated win for the downtown thoroughfare.

Chicago retail brokers Bisnow interviewed said the deal is a good omen for future leasing activity and a sign that heavyweight companies are beginning to notice the slowly improving conditions on State Street.

“It is, without question, a symbol of the comeback that State Street is having and, to some extent, that the Loop is having,” Stone Real Estate principal John Vance said.

New investment in the Loop totaled more than $318M in the fourth quarter, with the number of vacant storefronts on State Street decreasing nearly 14% from Q3, according to the Chicago Loop Alliance. The decrease in vacancy reflects the more than 40 new restaurants, cafés and retailers open or set to open soon in the Loop. 

Vance, who tracks 90 downtown blocks for his annual Loop retail analysis, said Barnes & Noble is on a roll and its expansion is the continuation of some of State Street’s momentum in the last couple of quarters. 

“Barnes & Noble is a really, really strong concept right now,” Vance said. “And they're opening stores in Chicago because their Chicago locations are performing.”

The new downtown location for Barnes & Noble is one of four stores the retailer is opening in the Chicago area this year, alongside a spot in Hyde Park, a new home at the Westfield Old Orchard Mall and one in Oak Park.

The retailer didn’t respond to Bisnow’s request for comment on the location choice, but its vice president of store design, Janine Flanigan, told the Chicago Sun-Times that the Chicago market is “a very important one for us.”  

The Barnes & Noble deal marks the start of a shift in the tenant mix on State Street, Cresa principal Marcus Cook said. State Street was historically known for soft goods and traditional retail, but it didn’t feature as many experiential or necessity-driven offerings, which are gaining traction as the area evolves, he said. 

“I like Barnes & Noble going into the market there because, listen, they're by nature a selective and a data-driven retailer,” Cook said. “State Street will not look the same as it did 10 years ago, but I also think that's why the recovery is more durable.”

There are big projects set to come to fruition in the near future that will bring foot traffic to the area and could provide another shot in the arm for downtown retail on State Street and beyond.

The much-anticipated renovation of the James R. Thompson Center into Google’s new downtown headquarters is progressing, and the tech giant is looking to start occupying the redeveloped space in early 2027.

Developers also began work on some of the LaSalle Street office-to-residential conversions in 2025, a program expected to add about 1,800 new residential units to Chicago’s total supply and bring scores of new residents into the Loop to shop. 

“Back in the day, your daytime [population] was your only [population], and then your theater district,” Cook said. “There wasn't a residential component that really throws everything upside down and allows for volume and for the velocity to have larger-box tenants and daily uses that create a true retail microcosm.”

And even before the conversions and Google bring more bodies downtown, interest in State Street is popping up. 

Baum Realty Group principal Deena Zimmerman said the tenor of the talks she has had with retail clients eyeing locations on State Street has evolved significantly over the past year and a half. At the time, one of her food and beverage clients had concerns over a possible daytime traffic lull and was weighing the merits of staying open on the weekends.

Those conversations look different now.

“I do see more and more tenants having more confidence,” she said. 

Zimmerman said she advised multiple clients who signed leases on State Street in 2025 that if they didn’t lock in terms now, rents would keep rising as the area’s recovery progressed. She thinks the next wave of tenants who will look to sign leases on the thoroughfare will be fast-casual users and that more national brands will likely fill in, rather than independent operators.  

State Street still has a ways to go to reach its former activity levels before the pandemic and corresponding decline in office usage ravaged area retail. From the pandemic shutdown through 2024, the most recent period for which comprehensive retail data is available, Loop retailers vacated 222 storefronts totaling 660K SF, according to Stone Real Estate.

Cook cautioned that Google’s impact on downtown could follow a similar trajectory to its move to Fulton more than a decade ago. In both instances, the tech giant’s moves led many to project its high-earning employees would provide a “vibrant injection” of retail customers, Cook said.

“What nobody took into account at the time back then was they're very self-sufficient,” Cook said. “They had their own culinary team, and they were really catering to their employees’ wants and needs in the building. We didn’t see as much spill.” 

Some of downtown’s distress may actually work in retailers’ favor.

As office buildings with ground-floor retail trade hands at a discounted basis, new owners and lenders may have capital for tenant improvements and motivation to bring in retail concepts that complement their office space, Cook said.

When buildings sell, it leads to a total reevaluation of the asset as a whole, and fresh blood may be more open to “seek a path” that’s a little unorthodox, he said. Usually, the retail component was the second thought in a full building, and now the script has flipped, with that piece equally important.

“Nobody wants to go tour office space when the first floor is either uninhabitable, obsolete or just dark with no future,” Cook said. “Sometimes you have to judge a book by its cover, and the cover is the retail.”

For some of the stretches of State Street that have elevated vacancy, it can be scary to be the first tenant on the block, Zimmerman said. But at some point, they won’t be the only ones there, and early-moving tenants will benefit from heightened incentives like reduced rental rates, more tenant improvement dollars or free rent. 

“I'm not saying it's going to be gangbusters, but I think each quarter, I'm still very confident we're going to see a couple leases signed,” Zimmerman said. “And I think it's just going to continue to go either direction down the street as things fill in.”