Armitage/ Damen/ Southport Survey – 2022

Stone Real Estate has completed its 2022 Armitage/Damen/Southport Retail Survey, an annual market analysis of Chicago’s three primary boutique neighborhood retail streets. In this sixth edition of the Survey, the data shows a mixed bag for these three corridors in 2022 and identifies their disparate leasing trajectories as follows:

1) Armitage remains the heavyweight followed closely by Southport;
2) Damen is beginning to lose its apparel DNA as service retailers now dominate the street;
3) Southport continues its strong performance even with a considerable vacancy in the heart of the corridor.

The highlights for the three Avenues are as follows:
Armitage Avenue (bounded by Sheffield to the West and Halsted to the East):

Vacancy: Remained flat and fundamentally non-existent at 2.9% from 2021 to 2022;
National vs Local Tenancy: Experienced an increase in nationals from 67.8% in 2021 to 70% in 2022;
New Retailers: Todd Snyder, Buck Mason, True Classic Tees (by Leap), and Jenni Kayne;
Soft Goods/Apparel Occupancy: A marginal increase from 52.5% to 53.2%;
Digitally Native Brands (E-tailers): Stayed flat from 2021 to 2022 at 25.3%.

Armitage landlords have never enjoyed such a favorable position. The vacancy rate remained flat at 2.9% from 2021 to 2022 and the lone remaining vacancy on Armitage is the former Charlie Trotter’s restaurant, which has been closed for over 10 years. In 2022, POGO and the Daily Harvest closed their doors and McShane’s Exchange relocated to Halsted. These three vacancies were quickly backfilled by Jenni Kayne, Buck Mason and Todd Snyder respectively. With vacancy effectively non-existent and leasing velocity incomparably strong, Armitage holds its position as the premier boutique corridor in Chicago.

The emergence of e-tailers opening physical storefronts has been the key ingredient to Armitage’s ascension. Representing 25.3% of the street’s co-tenancy, this amount nearly triples the combined totals of Damen & Southport. Buck Mason and True Classic Tees add new e-tail blood to complement the existing knockout lineup of Warby Parker, Allbirds, Bonobos, Parachute Home, Interior Define, Rothy’s, the Black Tux and Outdoor Voices. This co-tenancy solidifies the desire of e-tail brands to establish their presence on the street and execute their omnichannel strategy in Chicago.

The additions of Todd Snyder and Jenni Kayne add a dash of aspirational retail to Armitage and drove the percentage of national retailers above 70% for the first time. This bump in nationals reduced the percentage of locals just over 2% now accounting for only 27% of the street, an all-time low for the corridor. Service retailers still hold a respectable 35% of the street while the number of restaurants dipped slightly below 9% for the first time in the Survey’s history. Soft goods retailers now dominate Armitage and account for 37 total storefronts, nearly 74,000 sf and 53.2% of the street.

Damen Avenue (bounded by Willow Street to the North and North Avenue to the South):

Vacancy: A material decrease from 22% in 2021 to 19.4% in 2022;
National vs Local Tenancy: Local retailers surged from 26.4% in 2021 to 33.1% in 2022 while nationals contracted by 3.8%;
New Retailers: Chase Bank, Bartaco, Bond Vet, Chase Bank, MZ Wallace (by Leap), Bellows Film Lab, City Soles, and Ivy Hall Dispensary;
Soft Goods Occupancy: Significant decrease from 40.8% in 2021 to 30.7%;
Digitally Native Brands (E-tailers): Minor decrease from 3.6% in 2021 to 3.3% in 2022.

When COVID-19 hit, Damen suffered the most as compared to any other retail corridor in Chicago. Vacancy surged to almost 30% in 2020 and Damen found itself in an adapt or die situation. Now, three years removed from the pandemic’s emergence, Damen Avenue has fundamentally changed from a street with a vibrant apparel co-tenancy to one dominated by service-oriented users. From 2021 to 2022 alone, the percentage of service retailers surged by over 12% to 35.2%. Service retailers now account for a higher proportion of the street than soft goods (31%) and restaurants (15%); a first over the duration of the Survey. This represents a significant transformation for a street that has traditionally been known for its edgy soft goods and trendy restaurant co-tenancy. This prompts the question of whether Damen Avenue can remain relevant for soft good retailers looking to establish a bricks and mortar storefront or will it be replaced by Milwaukee Avenue immediately to the south or Fulton Market in a completely separate geography?

As evidence of the apparel to service retail trend, in the last year alone, Bond Vet supplanted the North Face and the Kensington School received City approval to replace four buildings on the 1700 block of Damen, notably including the former Mindy’s Hot Chocolate restaurant. Uniform Teeth opening at 1616 N. Damen, Chase Bank leasing the long-vacant Damen & North corner and Bellows Film Lab debuting at 1702 N. Damen all contribute to Damen’s new service identity. The openings of MZ Wallace and City Soles provided some fresh apparel co-tenancy, but could not halt the precipitous 9.6% drop for soft goods retailers. On the restaurant front, Bartaco backfilling the Northside Bar will bring a needed nightlife component that Damen has been sorely lacking.
Southport Avenue (bounded by Addison Street to the North and Roscoe Street to the South):

Vacancy: Rose from 1.7% in 2021 to 4.7% in 2022;
National vs Local Tenancy: Considerable decrease from 66% in 2021 to 61.4%;
New Retailers: Claire’s, Oros (by Leap), Thirdlove (by Leap) and Smoking Chicago;
Soft Good Occupancy: Minor step back 55.1% in 2021 to 53.1%;
Digitally Native Brands (E-tailers): Noticeable decrease from 8.1% in 2021 to 4.4% in 2022.

The Southport corridor remains consistently stable. In the 5-year span from 2017-2021, the street’s turnover rate never surpassed 7%, and despite an unprecedented pandemic, vacancy never exceeded 4.6%. Against these high standards, Southport’s vacancy increased three percentage points to 4.7%, which is the highest rate since 2015. While it would be tempting to say Southport has lost ground to other trade areas like Armitage or Fulton Market, in this instance, the devil is in the details.

The two current vacancies on the street are the former Amazon Books at 3443 N. Southport, following Amazon’s decision to shutter its physical bookstore experiment, and Real Good Stuff at 3458 N. Southport, which abruptly closed all its stores in December. It’s clear that these departures were the result of concept-specific issues rather than any potential weakness in Southport’s real estate. The openings of two e-tailers: Oros and Thirdlove through the Leap platform, along with kid/teen-friendly Claire’s demonstrates the continued confidence that both upstart and long-standing brands have in the street. This limited vacancy and vibrant new leasing points to a fundamentally strong retail corridor that will continue to thrive in 2023.