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2004 : CHICAGO'S LOOP CONTINUES TO CULTIVATE NATIONAL RETAILER INTEREST Strong Leasing Activity Led By Restaurants and Financial Institutions Pushes 2003 Year-End Vacancy Rate to 15.66 Percent Feb. 24, 2004 The evolution of Chicago's Loop into a thriving business, residential and entertainment destination is continuing to gain the attention of national retailers, according to the 2003 Loop Report by Chicago-based Baum Realty Group, Inc. The leading retail brokerage firm, which concentrates on the Chicago metropolitan market, last year negotiated 41% of all retail transactions in the Loop. "Banks and fast food restaurants led the charge into the Loop last year with a total of 11 new locations added in each category," said Allen Joffe, principal and managing broker with Baum Realty Group. "Competition in the financial services sector, increased demand of office workers for nearby amenities and an increased Loop residential base all contributed to the significant leasing activity among restaurants and financial institutions in this area." According to the report, new Loop branches were opened by Bank of America, Bank One, LaSalle Bank, Fifth Third Bank, TCF Bank, Charter One and Washington Mutual. Conducted annually by Baum Realty Group, the Loop Report is an analysis of the retail real estate market of roughly 106 blocks bounded on the north by Wacker Drive, on the east by Michigan Avenue, on the south by Van Buren Street and on the west by Halsted Street between Lake Street on the north and Van Buren on the south. The report lists the 2003 year-end retail vacancy rate at 15.66%, which is 1.96 points higher than the vacancy rate at year-end 2002. The report cites a total of 34 retail transactions completed during 2003, with gross average asking rental rates of $57.52 per-square-foot. Some of the national retailers that were new entrants to the Loop during 2003 included Nordstrom Rack, H&M, Forever 21, Washington Mutual Bank, Baja Fresh, Qdoba, Specialty Café, Charley's Steakery and Market Foods. To enter the market, some retailers have had to take more space than preferred due to increased competition for available sites. Barnes & Noble, Crate & Barrel and Panera Bread are said to be interested in Loop locations, according to the report. While the greatest volume of transactions, 44.11%, were food related – coffee, fast food and full service restaurants – the largest shift in leasing activity was in the banking/finance sector. During 2003, 32.35% of the transactions were banks or financial service firms compared to 9.4% in 2002. Other retail transactions in the Loop in 2003 included: 8.82% for both the apparel and pharmacy/drugstore categories and 2.94% for both the office supply and service/copies categories. "Last year's strong consumer spending patterns helped generate strong retail leasing activity, particularly towards the end of the year," said Joffe. "Some building owners have been inspired by the market to convert under-used portions of their properties into retail space to add to their income stream. This includes 230 W. Monroe St. and Harris Bank at 311 W. Monroe St." Most of the activity is for space under 2,500 square feet, according to the report. Spaces larger than 7,500 square feet remain difficult to lease as users in those size categories are not currently active in the Loop. Big blocks of available space include the former Toys 'R' Us at 10 S. State St., the former Syms at 111 N. Wabash Ave. and Bank One Center's remaining retail space on its lower and mezzanine levels. "Overall we anticipate demand will remain strong during 2004 for Loop retail space and, as a result, rents will remain high – depending on the location," said Joffe. "The opening of Millennium Park will boost pedestrian traffic and should help generate more interest in the 110,000 square feet of retail space that will open on four levels later this year at The Heritage at Millennium Park, 130 N. Garland. The West Loop remains attractive to retailers thanks to its growing office and residential markets. The area's 15,000 square feet of new retail space coming on line in 2004 should be absorbed fairly easily, Joffe predicts. He sees demand for West Loop retail space continuing to increase, particularly with the surge in the office population that will be created by the scheduled fourth quarter opening of ABN Amro's new 1.2 million-square-foot office tower and the CTA's new 500,000-square-foot corporate headquarters. The highest retail vacancies, according to the report, are along Washington Street, which ended 2003 with a rate of 26.87%, up from 23.88% in 2002. Ending the year with the lowest vacancy rate was LaSalle Street, where the 2003 rate was 6.56% up from 2002's 1.6%. Wacker Drive saw the greatest change in vacancy, increasing 15 points during the year to 17%. |
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1030 W. Chicago Avenue :: Suite 200 :: Chicago, IL :: 60642 :: P: 312.666.3000 :: F: 312.666.7970 :: info@baumrealty.com |
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