Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-”We have 19 stores that serve Chicago neighborhoods, out of 101 stores in metro Chicago,” said Michael Mallon, VP of real estate for Dominick’s Finer Foods, a subsidiary of Safeway, as a speaker at “Large Format and Big Box Retail: The Chicago Story” a conference sponsored by DePaul University on Wednesday. “We should have 25 or even 50 more,” he continued. “There’s that much opportunity in the city.”

On that point, virtually all the speakers at the conference could agree. Namely, that despite recent retail development in urban areas, there are significant opportunities for retailers and retail development in the city, where large yet well-to-do populations are currently underserved by big box retailers. The question then becomes, how to best take advantage of the opportunities?

Other speakers at the conference, before a standing-room only audience at the Harris Bank Building auditorium in Downtown Chicago, included Shelly Herman, president of MetroEdge, a subsidiary of Chicago’s South Shore Bank; Liz Holland, a trustee of ICSC and CEO of the Abbell Credit Corp.; Jennifer Boss, SVP of Heitman; and Forrest Russell, senior development manager for Target.

Herman offered a number of reasons why big box hasn’t penetrated Chicago as thoroughly as it might, starting with an historic reluctance among retailers to open shop there. “There are a lot of misperceptions about the city, even among retailers who research the demographics,” she said, pointing out that examining median income data alone can obscure a lot of existing purchasing power in a particular neighborhood. “Low median income usually means a large number of poor people, but it hides the fact that a lot of middle-class live there, people who can and do leave their neighborhoods to shop in big box settings. Those retail dollars are ‘floating’ to other neighborhoods.”

Holland, who travels the country expensively to evaluate retail projects for underwriting and feasibility analyses, reviewed some of the more worrying governmental initiatives–at least from the point of view of big box developers and retailers–that might someday affect bog box development locally. For example, “anti-big box legislation in California, which would have required an economic impact study for every large retail project, was recently vetoed by Gov. Schwarzenegger as too onerous,” she said. “A move for public approval of all land use in Florida also failed, at least for now. Closer to home, a bill to require retailers to pay a ‘living wage’ to employees is in committee at the Chicago City Council, which means it has an uncertain future. But the idea’s out there.”

Boss said that the Chicago’s appeal to big box development has a national context, in that retailers are looking into the possibilities of new urban stores throughout the county. “There are a lot of interesting urban big box projects in the United States,” she said, noting that a lot of them are in a mixed-use setting. “Right now, for instance, all of Simon Properties’ projects are in mixed-use developments, with street grids kept intact, or added.”

Mallott pointed out that as a grocery store, Dominick’s doesn’t count as a big box retailer, strictly speaking. Still, he noted that the grocery stores interest in the city is as intense as Target’s or Home Depot’s or Best Buy’s. “As we see it, there are three challenges to opening in city neighborhoods,” he said. “Land assemblage is very difficult. Dealing with the city bureaucracy can be as well. And there’s also the cost of building in an urban environment, which is usually higher than elsewhere.”

Russell said that Target is “always looking in urban areas, but that wasn’t the case until recently. We had to learn how to build in urban areas, and how to use the tighter spaces as efficiently as possible–how to configure the sales floor, the receiving and stockrooms, and parking. It’s all very different from building out in a cornfield.”

He did note, however, that the retailer now has some expertise in urban development, and it’s paying off. “Our store at Elston and Logan, on the North Side of Chicago, exceeded all of our expectations,” he said. “It’s the highest-grossing store in the entire chain, and our other urban sites are doing well too.”

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

Once you are an ALM digital member, you’ll receive:

  • 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

*May exclude premium content
Already have an account?

Dig Deeper



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2022 ALM Global, LLC. All Rights Reserved.