A small ripple was felt by Chicago retail real estate brokers with the news earlier this week that retail vacancies were on the rise on North Michigan Avenue. But that’s just a bump in the road in what has been a strong market for local retail real estate.

While it’s wise to keep an eye on the Mag Mile, we’re still in the middle of a boom period in local retail not seen in years, according to NGKF’s spring retail report. And the numbers don’t lie, so let’s look at them.

1. Overall Vacancy Continues To Contract

Overall retail vacancy in the greater Chicago area declined by 20 bps in Q1 to 7.8%, the third consecutive quarter with positive absorption. The market has shown consistent growth after a rocky start to 2015. During that three-quarter period, the retail sector has seen 3.6M SF in absorption.

2. Downtown Is Still In Demand

Michigan Avenue may have more “for lease” signs in windows, but the total downtown vacancy rate improved by 260 bps as a result of 101k SF of absorption. It now stands at 7.1%. Vacancy rates and direct average asking rents along the Mag Mile are still the strongest of the downtown submarkets. The vacancy rate is 3.6%, while direct asking rents range from $350/SF to $650/SF. We asked Baum Realty Group president Mike Demetriou about the rise in Michigan Avenue vacancies. He says it’s still the most desirable downtown market for retailers ranging from luxury brands to recognized chains and believes the higher vacancies are a blip on the radar.

3. The Suburbs Are Booming Again

The numbers are just as impressive in the suburbs, which saw 616k SF of absorption and now boast a 7.9% vacancy rate, a drop of 10 bps. Suburban absorption the past four quarters totaled 4.7M SF and vacancy dropped by 70 bps to a level not seen since late 2008. The strongest are on the south side. The south city suburbs saw 110k SF of absorption and has a 7% vacancy rate. The south central suburbs (Tinley Park, Orland Park, Chicago Heights) had a 10% vacancy rate but 182k SF of absorption. Inner south suburbs such as Oak Lawn and Calumet City saw 40k SF of absorption and a 7.7% vacancy rate.

4. Non-Store Retail Is Outpacing Traditional Retail

In 2015, job growth among Chicago area non-store retailers grew by 6.3%, while the growth of traditional retailers increased by 5.7%. E-commerce sales accounted for $90B in business in Q4 2015 and shopping habits have changed with the advent of internet retailers and mobile devices. This is having contrasting effects on both the retail and industrial markets. As non-store retail job growth has increased, in-store retailers are scaling back the size of their leases. Average retail lease size has decreased by 39% since 2006, to an average of 2,647 SF. The demands of investors are now at odds with the needs of retailers who require more flexible space and leasing terms.

The growth of non-store retail is one of the foundations of the Golden Age of Industrial. Construction of warehouse and distribution facilities surpassed that of the total industrial market the past five years, a trend that will continue.