CHICAGO-Retail is still in a downward spiral in the Chicago area, with occupancy, rents and employment all dropping, according to a third quarter report by Marcus & Millichap. However, the velocity of the fall has slowed, and national chains, both new and established, are looking to get into the third largest US market.

Vacancy will increase to almost 12% by the end of the year, led by low occupancy in the suburbs. Employment dropped by about 14,000 jobs, though gains made in the first half should still allow the year to be on the positive side, if only slightly, compared to the roughly 234,000 jobs lost in the Chicagoland area.

However, mid-2010 marked the push by Walmart to put stores into Chicago, with the City Council finally agreeing to allow three new stores. Apple has plans to open a new flagship store in the city, and grocers such as Food 4 Less and Cost Plus World Market are taking over vacated market space. Even new chains are pushing again into the city, such as fast food franchise Beard Papa’s signing in Block 37.

Michael Marks with Marcus & Millichap says that new concepts can’t arrive fast enough to fill vacant space. “As we go into winter, we’re going to see a slowdown in lease velocity, but I think that retailers are also getting the 2011 pipeline set up. I believe we avoided the cliff in 2009, but we’re in for some bad weather the rest of the year.”

Evan Halkias, also with the firm, said he sees most retailers today as survivors. “I think we had a flushing out of retailers that did not have successful business plans, or owners that didn’t have the right fundamentals in place. Retailers became more efficient, better at how to operate in a thin economy. I think in 12-18 months, things will be going well,” he tells GlobeSt.com.

“The moment job creation picks up, retailers will follow,” Marks tells GlobeSt.com.