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Chicago shopping development bounces back

by Jessica DuBois-Maahs
Jan 29, 2013


Photo courtesy of Mid-America Real Estate Corp.

This year's number of new shopping developments is inching toward pre-recession levels, according to a recent study.


Jessica DuBois-Maahs/MEDILL

New shopping developments will continue to rise through 2014.

Shopping center developments in the Chicago area are finally on the upswing after reaching a 23-year low in 2012. The number of new shopping centers being built this year will represent the first significant increase since the recession. But the activity still trails far below pre-recession levels, according to a report by Mid-America Real Estate Corp. released last week.

Big names such as Walmart, Target and Costco are just some the chains that opened new stores last year, contributing to the 10 percent increase in new shopping developments. Small, privately owned grocery chains represented much of the growth, comprising six out of the seven projects completed in 2012.

“The big deal is that development is not continuing to drop,” said Andy Bulson, the author of the report, in an interview. “It looks like we've bottomed out and are slowly starting to see the end of the recession that stalled the shopping center development business.”

But the news may not be as good as it appears—the report does not include the amount of developments that closed during the same time period. There is also no evidence that online shopping is losing its popularity, and many shopping centers around the country are in trouble, retail experts say.

Looking forward, grocery chains such as Whole Foods Market, Mariano’s Fresh Market and Pete’s Produce will continue to dominate the new projects. Of the 18 new developments that will be completed this year, almost half are groceries. Most of them will be located on Chicago's South and West sides.

“Boom is too strong of a word,” said Peter Gill, a spokesman for the Illinois Retail Merchants Association. While last year's retail market growth in Chicago was on par with other big cities, certain types of businesses such as small grocery chains performed better than big shopping centers, Gill said.

Bulson is also cautious about his findings. He acknowledges the slight uptick in development is a positive sign, noting that new developments decreased by about 83 percent in the last two years from a peak of 35 in 2006.

Most of the new development is shifting from once-booming outer suburban strip malls to centralized Chicago locations. Among this year's projected developments, almost half of the shopping centers are in city locations.

But actually defining a shopping center in Chicago proved difficult for the study's researchers. The city's most popular shopping destinations are not outdoor strip malls; they are single stores such as those on State Street and Michigan Avenue. To be included in the report, a development must be at least 50,000 square feet, located in the Chicago area and be new construction.

National chains, for example, are finding the city to be a new and appealing location for future developments with several openings planned in the next two years. Wal-Mart Stores Inc. is slated to open three more Chicago-area locations by 2014, according to a company press release.

City residents crave “more affordable grocery options close to where they live and work,” according to Walmart spokesman Steve Restivo. East Lakeview residents have lauded Walmart's most recent store opening last month on Broadway Street after some Chicago residents initially protested its development.

A Target Corp. spokeswoman agrees, adding that Target's new Chicago locations including the one on State Street fill market gaps for city residents who generally lack inexpensive food and clothing options. “We identify potential new store opportunities in trade areas that are underserved,” said Sarah Van Nevel. Another Target store is scheduled to open this year on Chicago's North Side.

Bulson said the report paints an accurate picture of Chicago's retail development health, but he is hesitant to say the city's shopping centers have completely recovered from the recession.

“I think it's sustainable,” he said. “It doesn't mean everything is all better-- it just means that it's not getting worse.”