CHICAGO—It wasn't too long ago when the outlook for Chicago grocery could politely be called 'uncertain,' with the shuttering of Dominick's 72 stores at the end of 2013 as the most visible sign of this.

But that picture is changing, says Peter Caruso of JLL. GlobeSt.com caught up with the agency leasing lead for the Chicago and Midwest markets to find out what changes he's been seeing in the last twelve months.

GlobeSt.com: What's the current state of the Chicagoland grocery landscape?

Peter Caruso: Extremely competitive! As competition in the grocery arena continues to increase, supermarkets are generally seeing razor-thin margins, and staying profitable will continue to be a challenge. That being said, the supermarkets that will be most successful are those that find a strong value proposition. The grocery store market is fierce in Chicago, and split between the everyman stores, the independent grocers, discount grocers and lastly the organic/natural neighborhood markets.

We're seeing grocery stores like Pete's, Caputo's and Tony's really break down the neighborhood by its demographics and make sure that the product being carried in the store represents what their studies find. This has helped them build consumer loyalty and become the leading grocer in a trade area over the “everyman store.” Despite competition, the upside is that everyone has to eat and with food costs skyrocketing, more and more families are opting to stay home and cook.

For more information on the national grocery sector, and three reasons why the grocery landscape is shifting read JLL's recent Out with the Old, In with the New Report or visit http://bit.ly/JLLgrocery

GlobeSt.com: There are still 29 vacant Dominick's spaces, how does their vacancy impact the overall retail market and grocery in particular?

Caruso: My team here at JLL has worked on a few of these deals, and while they are hard spaces to lease, we expect most of the remaining stores will eventually be backfilled by alternative uses like an LA Fitness or XSport Fitness, or a big-box retailer like Floor & Décor. The appetite for these spaces have been strong, and most of the core vacant Dominick's stores have already been leased, but there is only so much capital and resources that operators have to open multiple stores at once. These vacancies have slowed the lease up of any other vacant boxes too, so the faster the market absorbs them the better!

GlobeSt.com: How do you expect the Chicago grocery landscape to change in 2015? In the year ahead, the Chicago grocery landscape should be slow.

Caruso: Mariano's, the leader in expanding grocery stores, will have a few more stores opening next year and Whole Foods will be getting their new stores open. We expect a few more of the vacant Dominick's will be taken over, but there shouldn't be anything too dramatic. Fresh format stores will likely have the most aggressive expansion plans going forward, driven by Millennial and Boomer demands for premium fresh produce and organic foods, as they're increasingly focused on maintaining a healthy lifestyle. Beyond fresh format stores, limited assortment and dollar stores are also seeing strong increases in store openings, as consumers continue to seek out more for their money since the recession.

Instant Insights /

Ringing Up the Competition in Chicagoland Grocery

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