The Loop endured its fourth straight annual vacancy rate increase in 2023, jumping to 30.13% in 2023 from 28.32% in 2022. Significantly, the vacancy rate has now doubled from its pre-Covid level of 14.92% in 2019. In the 22 years that Stone Real Estate Corp. has conducted its Annual Loop Retail Survey, the lowest recorded vacancy rate was 9.91% in 2015 and now it reached its high of 30.13% in 2023.
According to John Vance, Principal of Stone Real Estate and author of the Survey, the key reasons for this year’s high vacancy rate are as follows:
• The continued closings of pharmacies, led by Walgreen’s closing an additional three (3) locations at Michigan & Adams, Madison & Wells and The Thompson Center (now the Google Building);
• Additional store closings on State Street, from large stores like Old Navy at Randolph & State to multiple small shop closings at the base of the Palmer House;
• Several store closings throughout the Loop without significant leasing to counter the blow.
MICHIGAN AVENUE CORRIDOR (bounded by the Chicago River to the North, Ida B Wells Drive to the South, Lake Michigan to the East and the east side of Wabash to the West)
This submarket added 27,000 square feet of vacant space and suffered a vacancy rate increase to 28.18% in 2023 from 25.90% in 2022. The two large contributors to this increase are the shuttering of Walgreen’s across from The Art Institute and the closing of Liberty Travel at Michigan & Lake. While the storefronts facing Michigan Avenue and Millennium Park enjoy strong pedestrian traffic from tourists and residents, the submarket will struggle to backfill these two large spaces.
CENTRAL LOOP (bounded by the Chicago River to the North, Ida B Wells Drive to the South, the west side of Wabash to the East and the east side of Clark Street to the West)
The data shows ‘only’ a 25,000 square foot increase in vacant storefront spaces for a modest percentage jump of 24.75% in 2022 to 26.59% in 2023. If there is any positive news in these numbers, it is that while State Street endured several visible losses as Old Navy, Journey’s, Vans and several retailers at Palmer House that vacated their stores, the ordinary leasing of storefronts within the subtrade area mitigated some of the damage from State Street. Attempts at optimism aside, State Street’s vacant storefronts cast a palpable pall over the entire submarket. The entire east side of the block between Monroe & Adams is vacant, which deters any significant leasing on the adjacent block to the south. Of the 644,703 square feet of retail inventory fronting State Street, 226,131 square feet sit vacant or over 35% of the total inventory. Most distressing is that of the 291,084 square feet along the east side of State Street, 146,967 square feet remains vacant, which is over 50% of the total square footage fronting the East side of State Street. (These numbers exclude Macy’s & Target).
LASALLE WACKER CORRIDOR (bounded by the Chicago River to the North, Ida B Wells Drive to the South, the west side of Clark Street to the East and the Chicago River to the West)
This Corridor saw its vacancy percentage increase to 36.22% in 2023 from 34.48% in 2022. Most of this increase is caused by the removal of occupied square footage from the Survey due to the
closing of Walgreens, PNC Bank and the United States Post Office in the Thompson Center as Google’s massive renovation of the building has commenced. All eyes now look to the completion of that project and subsequent occupancy by Google employees as one of the drivers for the Loop’s resurgence. Until that day arrives however, the trade area again holds the highest vacancy rate of the three submarkets for the fifth year in a row. 39.80% of the LaSalle Street’s storefront square footage sit vacant, consisting of 79,232 vacant square footage from an inventory of 199,058 square feet fronting LaSalle Street.
WEST LOOP (bounded by the Chicago River to the East, I90/94 to the West, the south side of Lake Street to the North and Ida B. Wells Drive to the South)
While the vacancy rate for this West Loop trade area dropped from 27.95% to 25.04%, this drop is solely attributed to the removal from the Survey of the ground level square footage at 10 and 120 S. Riverside while those buildings complete their renovations.