The effort to revive State Street, the famous shopping district in the Windy City that includes such venerable institutions as department store Marshall Field's and the Chicago Theater, have hit a bump in the road.
Since the Street was reopened to vehicular traffic in the mid-1990s following the city's failed attempt at creating a bus-only transit mall, it has been reinvigorated. The north end of the Street had been turned into a theater district with four major theaters and the south end became an educational corridor.
But an annual survey of the State Street/Wabash Avenue shopping district shows that the vacancy rate among specialty stores climbed to 13.9% this fall, up from 4.5% a year ago. Average asking rents tumbled more than 30% during the period, plummeting to $39.29 per sq. ft. from $56.34 a year ago.
“These results signal a clear reversal of fortune in the generally positive trends posted over the past 12 years,” says Mike Shields, executive vice president of Chicago-based Northern Realty Group, which has conducted the survey for the past 13 years. The vacancy rate is the highest it's been since 1994, when it registered 10.3%. Northern Realty's retail survey tracks about 2.8 million sq. ft. in the State Street and Wabash Avenue corridor that stretches from Wacker Drive to Congress Parkway.
The 125,000 sq. ft. of vacant space is attributed largely to the recent closing of a 3-story, 56,000 sq. ft. Toys “R” Us store at Madison and State. Toys “R” Us is seeking to sublease the space. Another 35,000 sq. ft. of retail space in two vacant buildings located immediately south of the toy store is being marketed. More bad news came earlier this year when long-time retailer Carter Jewelers closed.
Further compounding State Street's problems is Block 37, an undeveloped, 2.85-acre site located across from Marshall Field's in the heart of the city. Shields describes Block 37, which has been renamed 108 N. State St., as a missed opportunity. “An outsider will look at it and wonder why it's vacant,” Shields says.
For more than a decade, several projects were proposed for Block 37, but none came to fruition for a variety of economic reasons. Arlington, Va.-based Mills Corp., which in June was named the new master developer for the site, is negotiating a letter of intent with city officials. London retailer Harrod's has expressed a strong interest in occupying the block as an anchor tenant.
Shields believes that the big blocks of available retail space present an opportunity to clarify the nature of the area. “Right now, I think the street is in dire need of an identity,” he says. Shields points out that in addition to anchors Marshall Field's, Carson Pirie Scott & Co., and Sears, State Street also is home to T.J. Maxx, Filene's Basement, Borders Books & Music and Old Navy. “There is such an extreme variance in the target customer. It's everybody and nobody.”
Brent Minor, vice chairman of the Greater State Street Council, believes State Street needs to capitalize on the 65,000 college students in the south end of the Loop. Those academic institutions include DePaul University, Roosevelt University and Columbia College, to name a few “There is a series of retailers interested in that market, including clothing and music stores,” Minor says. He also believes the street needs an upscale grocer.
Minor's vision is for State Street to evolve into a 24/7 community. A vibrant theater district is part of that plan because it creates demand for additional restaurants and shopping. To that extent, Minor notes a positive trend. “Our stores are open longer now than at any time in the last 10 years.”