Currently, only 219,259 sf of specialty store space is being offered for lease, down 20.6% from last year's 276,148 sf. The overall vacancy rate, including department stores, fell to 7.3% from 9% last year. The survey includes retail space on State Street and Wabash Avenue from Wacker Drive on the north to Congress Parkway on the south, excluding bank buildings. Included are single- and multi-tenant buildings, with ground floor space, as well as upper- and/or lower-level retail space with direct escalator service between levels.

As underutilized buildings continue to interest developers and are taken out of service for redevelopment, the total supply of retail space fluctuates from year to year, the survey notes. This fall, there was a drop in the total inventory of specialty store space, which excludes department stores, from 1,121,531 sf a year ago to a current 1,048,678 sf.

"A lot of the fundamentals are strong," Michael Shields, EVP of Northern Realty Group, tells GlobeSt.Retail. "There's an expanding population Downtown, and there's a recent history of success among retailers on the street. That's going to attract other retailers. It's no secret, for example, the Urban Outfitters and Ann Taylor Loft are looking hard at State Street."

Shields points out that the office population of Downtown on a business day is about three-quarters of a million, but that isn't the only pool of shoppers that State Street and Wabash Avenue are drawing from. "The residential population Downtown is growing by about 2.5% a year, one of the fastest growth rates for a CBD," he says. "And they tend to have money. In most of the Downtown households, income exceeds $100,000 a year."

Then there's the youth market. In recent years, there's been steady growth in the number of college students who live or at least study Downtown, at such diverse institutes of higher learning as Columbia College, the School of the Art Institute, Roosevelt University, Harold Washington College and others. A sizable dormitory, serving the School of the Art Institute, even opened on State Street in 2000.

"It's really gone unnoticed how many students are Downtown on any given day," Shields tells GSR. "It's at least 50,000, which is more than in Champaign/Urbana or most other college towns, for that matter."

Youth-oriented stores have noticed the trend, however: H&M, Forever 21 and Old Navy are all relatively recent entries to the State Street market, and are reportedly doing well. Shields also notes that Nordstrom Rack and Filene's Basement are attracting high numbers of value-conscious shoppers of all ages. The undeveloped Block 37 is showing signs of life, and the balance of the retail district, while still a work in progress, is clearly on the right path, he says.