CHICAGO-The economic downturn has been especially difficult forboth retailers and retail property owners along the StateStreet-Wabash Avenue Corridor. Yet, the days of high vacancy anddropping rental rates are numbered, according to Bruce Kaplan,senior vice president of CB Richard Ellis.

|

“I believe State Street has turned the corner,” Kaplansays. “It should be smooth sailing for the foreseeable future,starting in mid-2011.”

|

Kaplan recently spearheaded CBRE’s 2010 State Street-WabashAvenue Corridor Retail Vacancy Survey, which reports on marketconditions for the 12 month period ending October 31, 2010. Thereport cites a substantially higher overall vacancy rate and alarger drop in overall asking rent than reported in any previousyear since the survey’s inception two decades ago.

|

“Fortunately, this report will likely mark the end of relativelyhigh vacancy rate for State Street, as two large blocks of vacantspace are reportedly close to being leased,” Kaplan says. “As Block37 continues to steadily fill, and if the widely-reportednegotiations with Target are finalized at Sullivan Center in theformer Carson Pirie Scott space, the overall vacancy rate should bequite low by this time next year.”

|

With a total of 2.73 million square feet of retail space in theState-Wabash Retail Corridor, including 1.27 million square feet ofdepartment stores, and 1.47 million square feet of specialtystores, the retail vacancy rate for the corridor jumped to 12.9%from 7.7% the previous year and 1.3% in 2008.

|

The number represents the Corridor’s highest vacancy rate sincethe survey began in 1990. Until this report, the highestvacancy rate reported on the street was 9% in 2003.

|

The survey also found that the average asking rent decreased to$36.51 per square foot from $55.83 per square foot in 2009 and$59.47 in 2008.

|

Despite the overall dramatic rise in vacancy, net absorption wassignificant at 118,454 square feet, which is the third consecutiveyear of positive net absorption. The actual amount of vacantspecialty store space is now over 353,661 square feet, according tothe survey.

|

A large portion of the retail vacancy is in Sullivan Center, a15-story, mixed-use historic landmark. Designed by renownedarchitect Louis Sullivan and built in 1898, the property containsmore than 1 million square feet including 200,000 square feet ofretail space and 740,000 square feet of office space.

|

Local developer Joseph Freed & Associates bought thebuilding several years ago with plans to redevelop it. Formerlyknown as the Carson Pirie Scott, the historic property housed thedepartment store for more than 100 years.

|

Recent reports indicate Target is negotiating with Freed &Associates to take the former Carson Pirie Scott space, althoughall parties involved have declined to comment. Local experts saythe Minneapolis-based retailer has been trying to expand itspresence within the Chicago Loop for some time.

|

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.