For the fourth consecutive month retail sales nationally has rose. Americans are gaining confidence in spending as employment rises and household wealth increases due to higher home values and stock prices. The Conference Board's Consumer Confidence Index improved in August but decreased in September from 81.1 to 79.7. Even with the upswing of household purchases and improvements in the economy consumer spending is still unstable and flexing. For a stable and healthy economy The Index needs to be above 90 and remain.
For the Chicago retail market, the third quarter of 2013 ended with a slight increase in the vacancy rate to 8.9% from 8.8%. With the increase of vacancy the asking net asking rents have dropped to $16.97 per square foot. Since last year, the vacancy rate has increased 20 basis points with net asking rental rates slightly increasing.
Even with low vacancy levels such as in the Southwest Suburbs which stands at 5.3% - Landlords still are competing heavily for deals. Rental rates have not increased and tenant still have many options available. The tough part for most owners is they have one to three vacant units depending on the size of their centers. These units are usually the hardest suites to lease causing Landlords to be very aggressive in deal negotiations. Another reason for the lack of raising rental rates, from my personal experience, is that Tenants are watching their costs very tightly. Most likely due to the uncertainty of the market and the federal government.
Far N.W. Suburbs
Far North Suburbs
Far West Suburbs
Far S.W. Suburbs
Gross Bldg SF
Average Asking Net PSF
Even with the versatile market; Chicago area is experiencing new retailers entering the market