Midwest Real Estate News recently spoke to A. Rick Scardino, director of retail brokerage in the Chicago office of Lee & Associates, about the strength of the retail market in the Midwest’s largest city. Here’s what he had to say.
Midwest Real Estate News: The consensus today seems to be that commercial real estate activity is increasing in most Midwest markets, though commercial deals aren’t as plentiful as they were before the recession. Are you seeing this in Chicago, too?
A. Rick Scardino: We are definitely seeing more retail activity this year than we saw the last few years. This slowdown has gone on long enough that a lot of retail space has been absorbed. A lot of junior boxes have been absorbed in the last few years. That is now increasing demand for retail space in the Chicago area.
MWREN: What traits does Chicago posses that help its retail market even in today’s difficult economy?
Scardino: Chicago continues to be, because of its density, the great Midwest market for retailers to enter. Due to a high concentration of stores in a relatively small geographic area, the city is very attractive to retailers. Chicago is unlike many other parts of the country in this way. Just consider that a family-casual restaurant can come in and do 15 to 25 locations in the metro Chicago area, all an hour-and-a-half from one location to the other, and still draw enough customers so that each location can succeed.
MWREN: Are you seeing any signs that retail is heading for a stronger recovery?
Scardino: The International Council of Shopping Centers just had its Chicagoland Retail Connection at the Hyatt Regency McCormick Place. There were more than 400 of us there for this Summer summit. It felt like the mood in the room was the most positive it has been in the last two or three years. New retailers are coming to the area. Food continues to be the most active segment in retail, but new concepts are constantly arriving on the scene from different parts of the country.
MWREN: Besides food-related businesses, what are some of the other popular retail concepts today?
Scardino: The dollar stores, auto part stores and second-hand stores are all doing well today. They tend to be the most active today. On the other hand, some high-end grocers are expanding. Places like Mariano’s Fresh Market are expanding in the city. It’s not just the low-end category of retailers that are seeing expansion. With the high-end grocers, it seems to be fueled by people who are choosing to nest and entertain at home, those who have cut back a little on their dining out. They are now choosing to spend more at a grocery store and entertain at home. They want to enjoy the home that they have been able to hold onto.
MWREN: It’s not easy to predict the future, but do you see continued improvement for retail in the months ahead?
Scardino: I don’t think we’ll see any rampant up-tick in activity, but I do think that retail will continue to progress in a positive manner. People are more cautiously optimistic. Housing sales have been up lately. People are slowly starting to regain their confidence in the housing sector. If that continues to happen, you’ll see a steady increase in retail activity.
– Dan Rafter