CHICAGO-Michigan Avenue saw retail rents shoot up in the first quarter by more than 50% from Q1 2010 and vacancies remain extremely low at about 3.7%. The Magnificent Mile continues to benefit from the current trend of luxury properties enjoying increased sales, despite market fundamentals still resting below average, according to a recent report by CB Richard Ellis.

The North Michigan Avenue Retail Vacancy Survey claims that rents for the roughly three million square feet rose to $127.42 per square foot, up 53% from last year’s average asking rate of $83.26, and much higher than the rest of downtown Chicago. Average asking rates in the downtown are about $20 per square foot, and even lower, about $16 per square foot, when including the suburbs, with a total vacancy rate of about 9.9% throughout Chicagoland.

While vacancy rose up 100 basis points in the first quarter from last year, the 3.7% rate on the avenue is much better than the vacancy rate of 7.2% in Q1 2009. Bruce Kaplan, SVP with CBRE, says he’s not as optimistic as some. “I think we were so battered the past few years that just doing anything feels good,” Kaplan says. “It’s true retail is rebounding slowly through the rest of Chicago, but it’s fully rebounded on Michigan Avenue. It’s simple supply and demand, people want to be there, and landlords know that the luxury market is doing well.”