'We Suck Less, Finally’: Chicago Retail Is Climbing Back From The Worst Of The Pandemic

When moderator Mel Muoio of the Chicago Blackhawks asked panelists at Bisnow's Chicago Retail, Entertainment, Sports and Tourism event Wednesday at the Fifth Third Arena for one thing they wanted the audience to remember about retail before leaving, one panelist summed up her thoughts succinctly. 

“We suck less, finally,” Abbell Associates CEO Liz Holland quipped, to a chorus of laughs from the audience.

Holland’s tongue-in-cheek remark reflects the cautious optimism from retailers battling back from a brutal pandemic stretch that saw many tenants close up shop as customers stayed home and bought items from the comfort of their couches.

Demand for Chicago retail space went up by almost 4M SF by the end of 2023, Lee & Associates’ Zach Geller told RE Journals in April. Additionally, local firms are projected to add 30,000 new positions in 2024, with employment expected to remain on an upward trajectory. 

“Retail has always fought its obsolescence,” Holland said. “The good news for us is over the last 10 years, we've learned that the internet isn't going to kill brick and mortar retail, so we can put that nightmare behind us. But that still doesn't change … the fact that you have to evolve.

“Evolution now means something that you can’t do in your bunny slippers,” she added. “Now the internet has provided that whole independent channel of distribution of goods that used to force people to go to shopping centers.”

Adam Tritt, the chief development officer at Brookfield, said retailers need to provide reasons for people to get up off the sofa and come to visit “in the real world, not virtually.”

Tritt said Brookfield is looking at different combinations of daily drivers with anchor tenants they would not have considered in the past. The question companies have to answer is how to give people more reasons at different points in their day and different times of the year to visit retail properties, he said. 

“We achieve all that through the different uses, we add more entertainment, we bring in better [food and beverage] offerings,” Tritt said. “As we look at all these different pieces or components, it's through the combination of all of them that we get to the successful outcome because I don't know that there's one single add-on that is the magic pill to fix it going forward.”

Not all is rosy in Chicago retail, most particularly in its urban core. The city is grappling with a retail vacancy rate in the Loop that topped 30% for the first time in 2023, more than doubling its 2019 level of 14.9%, according to an annual analysis from Stone Real Estate. 

The number of empty retail spaces downtown has increased for four consecutive years, and the 30.1% mark is the highest vacancy in the 22 years Stone Real Estate has conducted its annual Loop retail survey. Along the nearly 1-mile stretch between Ida B. Wells Drive and the Chicago River on the east side of State Street, about 147K SF of the 291K SF inventory is vacant, according to Stone Real Estate.

Other parts of the city are seeing improved conditions, though, panelists said. 

Yet for stores to be successful, Hunden Partners’ President and CEO Rob Hunden said retailers need to turn away from cookie-cutter concepts and focus on ideas with unique, local draws.

An authentic environment in the space outside of the stores is also important, he said. That includes compelling sights, sounds and smells in the “negative spaces” that enhance customers’ in-store experiences. 

Hunden said the stockyards in Fort Worth, Texas, are a great example of creating a unique local experience. Area chefs were brought in to curate experiences, and now visitors stay four to six times longer than they had before. 

“There's a lot of other things to do plus an experiential boutique,” he said.

High streets, or traditional main streets in cities, still face some struggles, but investors are redirecting some of their focus into neighborhood retail, Hunden said.

“High streets are challenged right now, but a lot of that energy and investment is going into the neighborhoods,” Hunden said. “People want to feel the authenticity of the neighborhood that they're shopping in and go from place to place. The store formats are smaller. There's sort of a pre-washed grittiness that people want in their experiences.”

And as retailers look toward designing the spaces of tomorrow, those that landlords can potentially reuse for different tenants without extensive future tenant improvements are important, Tritt said. 

“The biggest trend for future-proofing is, again, the flexibility,” Tritt said. “How do we create things that are less purpose-built and more adaptive to what we want to see in the future?”