Chicago’s retail real estate market sees ups and downs in Q1 of 2025

Chicago retail real estate market, notably along the Magnificent Mile, continues to be challenged post-pandemic. Chicago’s Magnificent Mile has a rich history in Chicago. Changing consumer trends since the rise of online shopping, as well as societal changes since the pandemic, have served as drags on Chicago’s retail restate market.

With respect to the Magnificent Mile, the north end of the Mile has suffered significantly. In large part due to the closures of Topshop, H&M and major losses within Water Tower Place (namely anchor tenant Macy’s and the Foodlife food court), the north end of the Mile has faced significant difficulties.

Other parts of the Mile have fared somewhat better in recent years. For instance, the south end and central sections of the Mile have seen relatively strong demand for retail space. These sections of the Mile have benefitted from strong Oak Street shopping numbers that have helped revitalize this part of the iconic Mile. The central and southern sections of the Mile have also benefitted from the opening of the largest Starbucks in the world, the new Harry Potter World and new and renewing retailers such as Aritzia, H&M (which moved from the north section of the Mile), Mango and Alo.

According to JLL Chicago’s Retail Market Dynamics of Q1 2025, retail development in Chicago is down 76.9% since the pandemic. New retail construction is down 800,000 compared to pre-pandemic numbers. Chicago’s retail vacancy citywide is a relatively low at 4.7%. This low vacancy number is due to a limited new supply of retail space. JLL’s experts believe that despite the increase in move-outs and retailer bankruptcies/closures, the persistent demand for prime retail space will help maintain a respectable rent rates for existing retail real estate. Additionally, according to a recent CBRE report, Chicago was the leading market for net retail real estate absorption in Q1 of 2025. A high net absorption rate suggests rent returns for retail space should remain relatively solid.

With regards to the Chicago Business District, the Loop has seen high vacancy rates for its retail real estate since the pandemic. Remote work has led to lesser retail foot traffic and has led to restaurant closures. According to a recent Stone Real Estate report, the Loop retail vacancy rate in 2024 reached a high of 29.78%. This is a modest improvement over 2023’s vacancy rate of 30.13%. There are some positives in the Loop. Google’s investment and renovation of the Thompson Center and increased return to working in the office should help the Loop’s retail market in coming quarters.

On a positive note, Chicago’s neighborhood retail corridors, including shopping strips on Damen, Armitage and Southport are thriving, according to Crain’s Chicago Business and Stone Real Estate. According to Stone’s 2024 report. Southport, between Addison and Roscoe, had a 0% vacancy rate. Armitage, between Sheffield Avenue and Halsted Street, had a decrease in vacancy rate from 6.4% to 4.3%. Damen, between Willow Street and North Avenue, decreased its vacancy rate from 23.9% to 12.9% between 2023 and 2024. Added high income demographics, close proximity to public transportation and strong food and beverage options continue to boost these neighborhood corridors.

The Real Estate attorneys at Chuhak & Tecson offer substantial experience in commercial lease negotiation, landlord-tenant disputes, land use, zoning and permitting. We have represented landlords and tenants in retail real estate transactions all across Chicagoland, particularly in the food and beverage space. We welcome you to contact our firm should you have a question about your retail lease or any real estate matter.

Right there with you.

Client alert authored by Kevin M. Coyne (312 855 5441) Principal, with research and drafting assistance by Brooke Weiss (312 855 4602), Law Clerk.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.