Retail demand remains high for the Greater Chicago market, according to Mid-America Real Estate Corp. brokers, who compiled the following data from market reports for the second quarter of 2002:

Overview

Big box retailers in the home improvement, discount department, grocery/discount and furniture sectors are being enticed to further their expansion efforts in Chicagoland due to the suburban housing surge and existing housing densities in the city and in the major retail corridors.

Mid-America's Retail Demand Study shows an approximate 12.5 million square feet of "pending" demand, i.e., retailers that would enter the market given the appropriate conditions. This is an increase from the 12.2 million square feet reported for the year's first quarter.

Investment Outlook

It's a seller's market in Chicago. Low interest rates, lack of product and poor performance on Wall Street have made it an ideal time to put investment properties on the market. Grocery-anchored product in particular is in high demand.

"Rates will remain low, and demand will continue to be strong," says Rick Drogosz, who heads up Mid-America's Investment Sales Group. "For the remainder of this year and into early next year, the climate will likely be very good for sellers."

Power centers, which had previously fallen out of fashion, are enjoying a resurgence of interest due to the lack of other product on the market.

Recent Retail Trends

Fierce competition between local and national banks has driven up prime outlot positions in all major markets. Lead players are Fifth/Third, Harris, LaSalle and First American, as well as many smaller local banks.

Super Target, the 175,000-square-foot discount department/grocery store venue, has secured five sites in Chicagoland.

At Deerbrook Mall in Deerfield, Ill., a Service Merchandise site is being demolished for redevelopment into a new home improvement store, The Great Indoors.

Furniture retailers Rhodes Furniture and Walter E. Smithe absorbed the last two of three available HomeLife stores in Niles and Oakbrook, Ill., respectively. One store remains in Merrillville, Ind.

Restaurant Activity

With the recent economic slowdown, high-priced chains have taken a back seat to quick casual operators. These limited service, counter format restaurants offer prepared-to-order food, delivering better taste and quality than fast food restaurants. Mid-America's Steve Frishman reports the greatest number of recent new deals in this category by Corner Bakery, Panera Bread, Noodles & Company, Chipotle Mexican Grill, Baja Fresh and Potbelly Sandwich Works.

The Italian restaurant category has also been more competitive with the entry of two new operators. Biaggi's, a traditional college town chain, is currently under construction on an outlot in Deer Park, Ill. Carrabba's Grill, a subsidiary of Outback Steakhouse, will soon start construction on a unit in Woodridge, Ill.

An explosion of new residential and hotel units in the River North neighborhood of Chicago has drawn some of the traditional, suburban, casual theme operators into this area. Chili's, Buca Di Beppo, Red Lobster, Olive Garden and Weber Grill recently completed deals here. A few "mega restaurants" (10,000 to 30,000 square feet) have also finalized plans to open in River North, including Fogo de Chao, Lalo's and Bob Chins.

Mid-America Real Estate Corp., a ChainLinks company, is located in Oakbrook Terrace, Illinois.


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