HEARTLAND SNAPSHOT, JUNE 2006

Chicago Retail Market

The recent trend in the Chicago retail market has been the redefinition of the grocery sector. Superstores such as Wal-Mart and Target are competing with  Whole Foods Market and Trader Joes on the high-end, and discount grocers such as Aldi, Food 4 Less and Cub Foods on the opposite end of the spectrum. Mid-size grocers, including Jewel-Osco and Dominick’s, are struggling to compete with Wal-Mart, and will slowly dissipate with the impending SUPERVALU acquisition of Albertson’s and changing consumer shopping trends. According to Steve Panko, president of Chicago-based V-Land Corporation, high-end speciality shops that simulate small lifestyle centers are also an emerging trend. The fast-casual restaurant industry is “overcooked,” Panko notes.

Oswego, Illinois, will add 1.5 million square feet to its market once Wal-Mart, Lowe’s Home Improvement Warehouse, Kohl’s, Dick’s Clothing and Sporting Goods, and Best Buy are built and completed. The Bolingbrook/Interstate 355/Boughton, Illinois, area will see the addition of a Bed Bath & Beyond and a potential Costco in the market. “[These projects] will redefine the trade area,” Panko says. In Naperville, Illinois, malls and centers will, as a result, experience less traffic; however, the increase in population should fill in all the trade areas. The majority of development is taking place n the southwest suburbs and Chicago’s South Loop neighborhood due to significant population growth.

V-Land Corporation, Mid-America Real Estate Group and Rubloff are the some of the most active retail developers in the area. Recent leases arranged by these companies include JC Penney in Woodridge, Illinois; Wal-Mart, Lowe’s, Kohl’s, Dick’s and Best Buy in Oswego; and Target and Kohl’s in North Aurora, Illinois. New tenants to the market include JC Penney, LA Fitness, Roundy’s and Circuit City.

Panko advises people to keep an eye on the Romeoville/Weber Road area, calling it “the next Randall Road.” In Yorkville, Illinois, along Route 47, “retailers are lining up,” as they are in Oswego along Route 34 and in Portage, Indiana, along Interstate 94.

“Retailers besides Target and Wal-Mart are being more selective, so the stores they open need to have an impact,” Panko says. With fewer trade areas being developed, less openings are being created and retailers will need to wait for the population to fill in before entering these sites.

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