The Chicago retail market absorption remains positive in neighborhood centers in line with national trends. In Chicago, multiple locations vacated by Dominick’s have been backfilled with new leases by Mariano’s, Jewel-Osco and Whole Foods.
Nearly 30% of retail activity in the beginning of the 4th Quarter included properties part of a portfolio sale/multi-property sale. This included the sale leaseback of 13 Jewel-Osco grocer locations. These locations were part of the 71 locations nationwide under the CF Alberts LLC banner in a bid to raise over $720M as filed with the SEC in late September. In November, six Walgreens locations have sold and/or are pending sale.
Occupancy rates overall in the retail sector have held steady hovering around 93%. Power centers have struggled and dragged down occupancy rates. Market sales history through 2017 indicate a median sales of $168.46/psf and overall cap rate of 5.8% at the end of the 3rd Qtr. The Northwest Chicago submarket has had the greatest volume of sales transactions with a cap rate on average 40 basis points higher than the overall market at 7.3%. Sales volume in 2017 based on transactions and sales have been slow comparative to six years prior. CAP rates remain at historical lows, driven largely by the single-tenant net lease sector. Price per SF on this lower sales volume however have continued on an upward trajectory surpassing the post recession sales prices (see Sales Volume & Median Price chart below).
Vacancies are below historical average with new supply pressure remaining minimal. Rent growth has been flat in 2017.
PROJECTS UNDER CONSTRUCTION & ESTIMATED MARKET DELIVERY
PROPOSED PROJECTS BY SUBMARKET
NET DELIVERIES & 5 YEAR FORECAST | Development is on par with 2016 however is lower than 2013-2015.
NET ABSORPTION, NET DELIVERIES AND VACANCY RATES & 5 YEAR FORECAST
TRANSACTIONS & PENDING SALES
SIGNIFICANT SALE & PENDING TRANSACTIONS | LAST 30 DAYS – SINGLE TENANT
SIGNIFICANT SALE TRANSACTIONS | OCTOBER 2017 – CHICAGO MARKET
Chicago Retail News Highlights
- After Foreclosure Sale, Lender Courts New Developer for Purple Hotel Site
- Supermarkets Are Saving Retail Because Shoppers Still Want to Squeeze Tomatoes
- New York Investor Plans new Mag Mile Retail Flagship
- Brookfield Property Partners Bids Almost $15 Billion for Rest of GGP
- CRE Opinion: What’s Wrong with Those ‘Retail Armageddon’ Headlines
- A Retail Weekend for the Record Books
- PetSmart® Hits Major Milestone by Opening 1,600th Store in North America
- Art Van buys Levin and Wolf
- Rite Aid Announces First Closings of Asset Sale to Walgreens Boots Alliance
- Black Friday Boosts Battered Department Stores, Some of Which are Claiming a “Record” Weekend
- Kwik Trip Plans Major Expansion
- Dollar Tree Dazzles Hot in Retail Sector
- Food Halls Help Urban Retail Landlords Maintain Competitive Edge
- Fogo de Chão Opens Milestone 50th Location
- Retailers Experiment With a New Philosophy: Smaller Is Better
- Smart & Final Boosts Promotions to Compete in Q3
- Bon-Ton to Shutter 15% of its Stores: Q3 Net Loss Widens
- Albertsons Invests in Texas-Based El Rancho Supermercado, Bob Miller Comments
- Report: Winn-Dixie’s Parent Company, Bi-Lo, Could be Headed for Bankruptcy
- Papa Murphy’s Loss Widens in 3Q as Store Count Falls
- Pop-Up Shops May Be This Holiday Season’s Big Retail Trend
- Vitamin World Seeks to Close 124 stores, Sell off the Rest