No Need for New Bricks and Mortar in Retail

CHICAGO—Safeway’s decision to shutter the 72-store Dominick’s chain put a shadow over the Chicago metro region’s retail market throughout the year. However, the vacancy rate declined and rental rates responded by increasing, according to a year-end report just published by NAI Hiffman. But this progress for the most part has not impressed developers, who have largely remained on the sidelines and say new construction will have to wait until the housing market comes back.

The limited new construction during the year was instrumental in the metropolitan area’s high rate of positive net absorption, according to NAI Hiffman. “In 2014, the vacancy rate had dropped from 9.0% to 8.3% by the end of the year; this equates to a net absorption of approximately 6.6-million-square-feet.” Furthermore, citing CoStar, the firm said that the reduction in vacancy pushed the average rental rate from $15.62 to $15.79 or 1.08% over the course of the year.