Mid-America: Chicagoland retail development up

Oakbrook Terrace, Ill. — Shopping Center development in Chicagoland has improved significantly in recent years. Activity showed a 98.7% increase in total sq. ft. from 2012 to 1013, according to the “Chicagoland 2014 Shopping Center Report” just issued by Mid-America Real Estate Corp.

In 2013, owners developed approximately 2.26 million sq. ft., compared to 1.14 million sq. ft. in 2012.

And there is more to come. Andy Bulson, Mid-America principal/VP and author of the report, estimates that development in 2014 will reach 2.64 million sq. ft. “We are still significantly below the 30-year average since we began tracking development, however, continued growth seems likely,” Bulson says.

Grocery-anchored centers continue to drive activity. Supermarkets anchored 10 of 15 planned centers in 2013. This year supermarkets will anchor 14 of 17 planned developments

Mariano’s is leading grocery-anchored development in Chicago, with 348,000 sq. ft. developed in 2013 and plans for an additional 683,000 sq. ft. for 2014. Wal-Mart trails Mariano’s in planned sq. ft. development for both 2013 and 2014.

While Mid-American did not track re-tenanting of locations in the report, Dominick’s decision to move out of Chicago will likely affect new development. “The re-tenanting of old Dominick’s locations will satisfy the growth needs of many retailers, therefore potentially stalling new development projects that are anticipated for 2015 and beyond,” says Bulson.

While self-development by major retailers remains common, local development is re-emerging. In 2013, 490,000 sq. ft. were self-developed by Target, Costco, and Menard’s. An additional 634,000 sq. ft. of self-developed projects are planned for 2014, two of which are being developed by Wal-Mart.

Wal-Mart, Costco, and Menard’s will likely continue to prefer to develop their own sites.

Developers produced 78% of new development in Chicagoland during 2013. This trend is expected to continue in 2014, with developers responsible for 76% of planned projects.

“We expect to continue to see self-development as the preferred deal structure for many retailers in the coming years,” says Bulson.

Activity in the suburbs is growing as well, according to the report. In 2012, four of seven new projects took place in the city of Chicago. Last year, however, 10 of 15 new projects took place in the suburbs. Looking ahead, 11 of 17 projects planned for 2014 will be in the Chicago suburbs.

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