In the Chicago market retailers have been expanding but only a modest amount of new development has been delivered, according to a Q2 report from Marcus & Millichap. This sets the stage for increased rent growth in the coming months.
The urban core rents increased by 2.2 percent year over year, the report stated. After virtually no change in 2016, average asking rent in the metro stretches to $17.40 in 2017. Development is slowing after the completion of 3.3 million square feet last year. Most of the new deliveries will be in suburban markets. The vacancy rate will fall to 7.3 percent this year, the lowest its been since 2008.
Suburban availability isn’t as tight as the city but a similar pattern is emerging there too, the report said. Grocery stores such as Whole Foods and Mariano’s are pushing the absorption. Whole Foods expanded its Wheaton square footage and Mariano’s added new stores in Bloomingdale and Des Plaines. Cermak Produce just signed a large lease this year for 89,000 square feet in Aurora.
As corporations move from the suburbs into the city, the influx of employees create a demand for housing, restaurants and shops. Finding great retail space is difficult in the city but with an already tight vacancy and rising rents, tenants must get more creative.