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CHICAGO-Two reports on the retail market in Chicago’s Loop point to a tightening of that market, with rents generally up in 1999. But there was a more mixed picture of vacancy rates, with one report finding that vacancies were up overall, while another report–focusing specifically on the State/Wabash shopping corridor–found that vacancies were down.

According to Baum Realty Group’s “Loop Report,” retail asking rental rates in the Loop rose an average of 3% across the board in 1999, with median class A space commanding $50 per sf, class B space $39.50 per sf, and class C space $36.50 per sf. Baum’s definition of A, B and C relies on average number of pedestrians passing a block per weekday. “A” blocks have an average of 30,452 pedestrians per weekday, with steady traffic throughout the day; “B” blocks average 26,101, with most of them at lunch or the rush hours; and “C” blocks average 11,303, with foot traffic relatively limited.

“We attribute this increasing [in rental rates] to the city’s shift to a more 24/7 environment,” says Allen Joffe, a spokesman for Baum. “With a growing Downtown office population and more residential developments in and around the Loop, retailers are recognizing that they can do more than just a 9-to-5 weekday business. Owners are capitalizing on this increase in foot traffic and are correspondingly raising rental rates.”

Also, according to the report, retail leases in the Loop (144 blocks bounded by Wacker Dr., Michigan Ave. and Van Buren) were comprised of: 35% fast food; 34% general retailers and service providers such as airlines and insurance companies; 19% apparel; and 4% banks.

Interestingly, Baum did not find a decrease in vacancies, but an increase. As of the end of last year, 139 storefronts were vacant for a total of 1,046 in the area that the report defines as the Loop, for a 13.29% vacancy rate. The preceding year’s rate was 11.24%. “Owners are being choosier about their tenants,” says Joffe. “Many of the available spaces don’t significantly impact the overall performance or cash flow of a building. Thus, buildings are judging prospective tenants by their perceived benefit as an amenity.”

Northern Realty Group released a Downtown retail report in October, but its findings were closely focused on the State/Wabash shopping district. According to Northern, vacancies there dropped to 4.3% this fall, down from 8.4% last fall. These numbers compare with reports made by the company in the early 1990s when vacancies in the area were as high as 23%.

“The survey findings prove that State Street is again thriving,” says Michael Shields, EVP at Northern. “The impending return of Sears and the new Dearborn Center are symbols of renewed vitality in the Loop’s venerable commercial corridor.”

Northern did not find an increase in rental rates along the corridor, which it pegs at $51.76 per sf, down slightly from fall 1999′s $52.28 per sf. The 1999 figure was a vast increase over 1998, however, when rental rates in the district averaged $38.90 per sf.

Shields cites the increasing round-the-clock nature of Chicago’s Loop as part of the reason for a robust State/Wabash retail corridor, but also points to public-private efforts to revive the area, which now seem to be paying off.

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