Tourists have returned to downtown Chicago this summer, and anyone looking at the crowds that pack Millennium Park, the Riverwalk and the shops on Michigan Avenue might think the city’s pandemic crisis has passed. But “For Lease” signs still cover many downtown storefronts, and office workers remain in short supply, meaning fewer customers for Loop retailers.
“Our clients are mainly people who work for financial institutions and law firms, and you don’t see a lot of our clients anymore, guys walking around with briefcases,” said Scott Shapiro, owner of Syd Jerome, a luxury men’s clothing store. in Central Circle. “It really is a lot of young people in khaki pants.”
The advent of COVID-19 vaccines unleashed pent-up demand, helping store owners lease new space in the metro area. But at the core, the pandemic has made it clear how essential one component is: the office worker. While an infusion of tourists in the spring and summer has boosted foot traffic in many business districts, the Loop is a step behind, and street-level businesses may continue to suffer until more businesses call people into the office.
But all your empty storefronts can also present opportunities to the Loop, according to retail experts. The new stores could make the city center more lively and help entice workers to leave their comfy home offices, especially if owners turn to independent, local, creative businesses rather than just national chain stores. . That would also make downtown more attractive to others, like the thousands of students and apartment dwellers who have moved there over the past decade.
“You don’t have to be a corporate executive to enjoy the Loop,” said Michael Edwards, executive director of the Chicago Loop Alliance, an advocacy group. “Downtown is no longer just a business district.”
Don Flesch’s central camera has been a mainstay of the Loop for photography enthusiasts since the late 19th century. It was hit hard by the last two years of turmoil. The store was looted and burned after the May 2020 killing of George Floyd by a Minneapolis police officer, but it reopened this year at his familiar location at 230 S. Wabash Ave. It’s a big change from 2019.
“Three years ago, there was a thriving activity outside our door with traffic and honking,” he said.
Today’s relatively quiet streets mean the store must maintain limited hours, four days a week, and business on some days is only 50% of the sales seen before the pandemic. But the 74-year-old, whose grandfather founded Central Camera in 1899, said he’s not worried.
Office workers are beginning to return, bringing back some old clients, and Flesch decided to launch new services, such as providing hour-long photo developing, to help attract new ones. More importantly, he looks forward to the fall, when photography students from local schools like Columbia College, DePaul University and others should arrive for new equipment and supplies.
“Office workers are not going to come back 100%,” he said. “But we think we’re going to have a great month when the universities are back up and running at full capacity.”
John Vance, director of Stone Real Estate Corp., said many downtown retailers are in a similar situation, seeing enough business from tourists and the few office workers who have returned to stay afloat, and looking ahead to falling. But few are willing to pull the trigger on new leases.
“There is very little leasing speed in the Loop,” Vance said. “You can feel the energy on Michigan Avenue and State Street, on both sides of the river, but unfortunately, while many (retailers) want to expand, the modest recovery we’ve seen hasn’t lasted long enough to help them make that decision.”
According to a 2022 report by Stone Real Estate, a third of the city’s 1,369 downtown storefronts are empty and the overall vacancy rate nearly doubled from three years ago.
Foot traffic equals customers, and retail districts that don’t rely on office workers are doing better, according to pleasure.ai, a data analytics firm that tracks mobile devices. Traffic in Old Town, Lincoln Park and Fulton Market was down less than 10% in June from the same month three years ago, while the Loop was down 27%.
And the bad news has continued to come downtown this summer.
Old Navy said this month it was leaving its 32,000-square-foot store at 150 N. State St., formerly occupied by Borders Books, leaving another big void in the retail market.
Still, the retail market is past the worst of the crisis, and some businesses seem willing to take a chance on State Street, according to Edwards. British sporting goods store JD Sports signed a lease earlier this year to take over space once occupied by Forever 21 at 10 S. State St. Several outlets have agreed to occupy spaces at Block 37, and late-summer discount retailer Five Below will occupy the store at 36 S. State St., taking over from Blick Art Materials, which will move to 16 W. Randolph St.
“We don’t want to exaggerate the size of these leases, but people are buying and things are much better than before,” Edwards said.
Other places with an improvement in retail leasing activity are Willis Tower in the West Loop, according to Vance, where owner EQ Office just completed a $500 million makeoveradding a five-level retail center called Catalog and the stretch of Michigan Avenue near Millennium Park.
He attributes Willis’ strong performance to the sheer size of the 110-story building, which ensures a large customer base even with a small percentage of office workers coming to work every day. And Millennium Park attracts a critical mass of tourists, workers, residents and hotel guests who support surrounding retail.
Of more concern is the future of the LaSalle Street and Wacker Drive corridor between Clark Street and the Chicago River, which relies primarily on white-collar workers, Vance added. Losing so many customers affected their local businesses, with the corridor’s vacancy rate rising to 35.6% this year, the highest Stone Real Estate has ever recorded for any business district.
Many clients of Syd Jerome, now at 20 N. Clark St., still work from home, Shapiro said, especially attorneys who now handle routine court appearances and even trials via Zoom. That came down to sales, which are down 30% to 40% for several months this year, and as much as 60% in the summer, typically a slow period for luxury menswear.
“There’s no one around to go in and impulsively buy something,” Shapiro said. “The good thing about our clients is that they tend to have a lot of money, but now instead of buying new suits, they’re buying third homes in Palm Beach.”
Shapiro knows similar store owners in the suburbs or even across the Chicago River, who are less reliant on white-collar workers, and their businesses seem to be reviving.
“That’s like another country,” he said.
But even though much of Loop retail is still struggling, Shapiro said Syd Jerome will persevere. His father opened the store in 1958, and since then it has weathered recessions, multiple break-ins, a broken window during the 2020 civil unrest, and the long recovery from the pandemic shutdown, even as several local competitors closed permanently. He now hopes that office workers will return in droves after Labor Day and that the store will be ready.
“Being a retailer means being optimistic, so I’ve always made sure we have inventory and we’ve kept our tailors employed,” he said. “There will be a return to the office and people will start to dress better.”
Vance said new Loop retail could play a role in bringing workers back downtown, but homeowners trying to fill empty Loop storefronts may want to look west to Fulton Market for inspiration. Instead of a retail line of national retailers, the neighborhood just west of the Loop, now filled with new office and apartment developments, includes a mix of local and independent stores, especially on Madison Street between Halsted and Racine streets.
Stores like Tribeca Boutique, a women’s clothing store at 1035 W. Madison, The Fig Tree, a gift boutique next door, and Blowout Junkie, a hair salon two blocks west, are all local retailers, Vance said, and provide variety is missing from much of the Loop.
West Loop resident and West Loop Community Organization President Damone Richardson said she agrees. She doesn’t find downtown districts like Michigan Avenue as appealing as she used to, and visits stores along Madison more often.
“It’s an opportunity to connect with local owners and also find unique products that you can’t find in big box stores or chain stores,” he said.
Edwards said there are already new retail concepts in the center. Outlets like The Color Factory, an interactive art museum in Willis Tower, the Medieval Torture Museum at 177 N. State St. next to the Chicago Theater, and the Museum of Illusions at 25 E. Washington St., offer experiences instead of only selling goods.
The University of Chicago Booth School of Business may have come up with the most unusual concept last summer when it opened Mindworks, a space dedicated to behavioral economics, in the Railway Exchange building across from the Art Institute. Visitors can not only view exhibits on the discipline, which examines how people make decisions, but also participate in research conducted on site by university scientists and graduate students, sometimes as simple as predicting a series of coin tosses.
Mindworks attracted more than 10,000 visitors in its first year, with nearly two-thirds agreeing to participate in research sessions, according to Mark Temelko, a spokesman for the Booth School of Business.
“We want to take behavioral science out of the ivory tower and into people’s everyday experience,” he said. “It’s a remarkably simple idea.”
Edwards said such insights will help the downtown retail market eventually recover. But it will take time, at least through 2024, as office workers return and property managers try to find the right mix of tenants.
“We’re going to need another year and a half,” he said.