Retail rents in the Clybourn Corridor rose in 2016, demonstrating the area’s strength even amid increased vacancy and new developments in the works.
Net rents on signed deals in the North Side district, Chicago’s second-largest shopping area after Michigan Avenue, rose about 5 percent to an average of $45.38 in 2016, according to a study by Chicago-based retail brokerage Stone Real Estate.
Retailers were willing to pay more to open shops in the retail corridor area along Lincoln Park despite an increase in overall vacancy to 10.9 percent, up from 10.1 percent in 2015.
Last year’s numbers demonstrate the strong position the Clybourn Corridor has achieved in the retail pecking order, after swelling to more than 2.6 million square feet of shopping space in recent years, said retail broker Jason Gustaveson, a Stone principal and author of the report. Added together, the corridor’s retail spaces exceed the total space in the massive Woodfield Mall in Schaumburg.
The Magnificent Mile, the largest shopping district in the city, has 3.1 million square feet of retail space. Unlike on Michigan Avenue, many Clybourn Corridor shoppers often move among shopping centers by car rather than on foot.
Stone’s survey area is bounded roughly by Clybourn, Webster and Ogden avenues and the Chicago River. This is the third year Stone has surveyed the Clybourn market.
“I think it still has a lot of room to grow,” Gustaveson said. “It’s the regional shopping area for the entire North Side of the city.”
Typically, rents rise as vacancy falls. But Clybourn’s bump up in vacancy is skewed by some large, multilevel vacancies, which typically take longer to fill, he said. That includes the former Restoration Hardware and Erehwon stores across from each other at the intersection of North and Sheffield avenues.
Also affecting the numbers are empty spaces in the New City development along Clybourn and Halsted Street, which added 360,000 square feet to the area last year. More than 75 percent of the space was leased at the end of 2016, according to Stone’s study.
“New City hasn’t leased up as quickly as they thought it would, and there are some spaces they’ve leased but they’re still doing buildouts,” Gustaveson said. “It’s such a big project that it took a long time for the neighborhood to figure out. It seems like there’s been a turnaround since the holidays, where it’s become more in people’s shopping patterns.”
Demand in the area could be tested further by several developments planned near New City, including one by the same developer, Structured Development. Going north, and likely much further into the future, developer Sterling Bay’s plans for a huge mixed-use development of the former A. Finkl & Sons steel site could include another large block of retail space.
Although many national retailers are closing stores rather than adding them, the Clybourn Corridor has been boosted by some brands setting up flagships there. Minneapolis-based furniture shop Blu Dot and Portland, Ore.-based lighting and home improvement goods shop Rejuvenation, known more for online sales, are recent arrivals.
“That adds a lot of cachet to the neighborhood, because they only have seven and nine stores nationally,” Gustaveson said. “When tenants like Rejuvenation and Blu Dot are looking for space, they’re looking for a dominant position that’s a big draw.”