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CHICAGO-In its annual report on the state of the State Street retail market in Downtown Chicago (which also includes Wabash Avenue, the next block over), Northern Realty Group has confirmed recent bad tidings in that market, especially in the form of increased vacancies and tumbling rents. After North Michigan Avenue, State Street is considered the most important shopping district in Chicago, and in recent years the City of Chicago and private organizations have made a serious effort to revamp the district.

According to Northern, the retail vacancy rate for specialty stores soared to 13.9% from last year’s 4.5%, while rents plummeted more than 30%. Currently about 125,500 sf of retail space is available in the district, up about 39,500 sf from last year. Average asking rents are now $39.29 per sf, down from $56.34 per sf in the fall of 2001.

“These results signal a clear reversal of fortune in the generally positive trends over the previous 12 years,” said Michael Shields, Northern’s EVP. “The forces of supply and demand are playing out in an environment in which major blocks of space are being added and subtracted, as buildings are redeveloped, replaced, or removed.”

Shields does point out, however, that not all is bad in the district. He cites a number of apparently thriving projects there, including the Downtown Sears that opened last year, the Burnham Hotel, the Gene Siskel Film Center and the Mentor Building, all of which are on State.

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