May 12, 2025 — The current state of the retail real estate market was the central topic of conversation at last week’s Chicagoland Retail Summit, hosted by Bisnow.
LG Group Project Executive, Andrew Hoppe, and fellow industry leaders shared insights on the intersecting impact of skyrocketing rental rates and dearth of available space as key drivers in Chicago’s tightening retail market.
Hoppe was joined in the discussion by Husch Blackwell’s Elizabeth Massaro, Abbell Associates’ Liz Holland, FNRP’s Mike Hazinski, Core Acquisitions’ Adam Firsel, Baum Realty’s Deena Zimmerman, and Siegel Jennings’ Molly Phelan.
The experts noted that, while the retail sector avoided predicted decimation with the rise of e-commerce, its survival was also central in creating the current vacancy crisis.
Per a JLL year-end report, national retail vacancy fell to 4.1% by the end of 2024. Malls fared worst at 8.7% vacant, while general retail vacancy stood at just 2.5%.
By comparison, Chicago’s retail vacancy rate dropped to a new low of 5.1% in mid-2024, marking seven consecutive quarters of tightening, as noted in a report by Marcus & Millichap in Q4 2024. The previous low mark for vacancy was 5.9% in 2018.
The narrowing vacancy rate can be attributed to a major slow-down in construction, with further strain anticipated as a result of the federal government’s tariffs on international trade.
Despite the negative impacts, the panel noted that the current challenges have driven at least one positive development: a renewed level of collaboration and cooperation between tenants and landlords to navigate and respond to the ever-changing environment before a lease is signed.
For full coverage of the summit on Bisnow, click here.