Reprinted from ChicagoBusiness.com
Loop retail market expected to stay strong
By Eddie Baeb
Jan. 29, 2007
The Loop retail real estate market continues to heat up, with vacancies falling and rents rising as Millennium
Park draws tourists, shoppers and more residential development to the Loop.
The retail vacancy rate in the Loop
dropped to 14.6% last year from
16.7% in 2005, according to a new
report by Chicago-based real estate
firm Stone Real Estate Corp. That’s
the lowest vacancy since 2002 and
also marks the second straight year
the rate has fallen.
(To see the report, click here.)
Stone Real Estate predicts the
vacancy rate will fall for a third year in 2007, as little new retail space is expected to come to market while
demand from retailers is likely to remain high.
“The retail market in the Loop is strong and should remain strong,” says John Vance, a senior associate with
Stone Real Estate.
Millennium Park is responsible for much of the improvement in 2006, as the vacancy rate fell to 23.5% from
29.8% in 2005 in the Michigan Avenue submarket south of the famed Magnificent Mile shopping strip.
Two restaurants and an Irish pub signed leases near Michigan Avenue last year, including a new restaurant by
chef John Hogan called Tavern at the Park and a new Irish pub called the Gage.
Mr. Vance says restaurants are attracted to that area by both the tourists and new residents moving there —
counting on customers being around seven days a week vs. the Central Loop, where the weekdays are bustling
with office workers but the weekends are quiet.
Still, the Central Loop had the lowest vacancy rate among the four submarkets, at 9.1%, as State Street
continues to become reinvigorated as a shopping destination. The once-scruffy street has had a lot of
redevelopments and pulled in big-name retailers in recent years such as Urban Outfitters and trendy Swedish
retailer Hennes & Mauritz A.B.
“Prime retail space has become really hard to find” on State Street, Mr. Vance says.
Other big deals inked last year include a Loehmann’s discount department store on State Street, and a 13,000-
square-foot French-style market in the new MetraMarket development in the West Loop, says Mr. Vance.
The West Loop’s vacancy spiked last year to 26.9%, but Mr. Vance says that’s because Stone Real Estate for
the first time counted MetraMarket, a 100,000-square-foot project adjacent to Metra’s Ogilvie Transportation
LOOP RETAIL VACANCIES
The retail vacancy rate in the Loop fell last year to the lowest level since
2002, with demand for space spurred by developments around Millennium
Park and continued strength of the Central Loop market along State
Street.
VACANCY RATES
Markets 2006 2005 2004 2003 2002
Michigan Avenue 23.5% 29.8% 24.1% 19.1% 18.9%
Central Loop 9.1% 8.7% 18.1% 18.0% 12.1%
LaSalle/Wacker 13.2% 13.9% 14.1% 13.5% 11.0%
West Loop 26.9% 16.7% 19.6% 19.8% 23.9%
Loop Total 14.6% 16.7% 18.2% 16.5% 13.4%
Source: Stone Real Estate Corp.

Center, formerly known as the Northwestern Station.
MetraMarket, being developed by Chicago-based U.S. Equities Realty, is in its beginning stages. Last year it
also landed a CVS drugstore and a new Italian-style coffee shop called Caffé RoM that becomes a wine bar in
the evenings.
As retail space has become tighter in most parts of the Loop, rents have also been rising making it hard for
some merchants to afford.
David Hoffman, owner of the art and jewelry store Arts & Artisans, says he’d like to open a fifth store in the Loop
but has begun looking elsewhere because of escalating rents.
“It used to be North Michigan Avenue was unthinkable for us; now it’s getting to point that so is everything else
in the South End,” Mr. Hoffman says. “We have a strong preference to be in the Loop. But there’s a lot of
pressure on the pricing of real estate for retail.”
Yet Mr. Hoffman acknowledges his store at 321 N. Michigan Ave. has benefited from Millennium Park traffic,
with business up by about 33% over the last two years.
“Millennium Park has been very favorable for us,” Mr. Hoffman says. “It has provided the kind of pull and draw
that was needed.”