Chicago Retail Market Report
2023 Investment Forecast
Favorable Long-Term Demographic Trends Draw Tenants
and Investors North and West of Urban Chicago
Retailers outside of city limits benefit from growing populations. Long before pandemic-motivated trends shifted some households out of city centers, Chicago’s northern and western suburbs were focal points for residential growth. As these neighborhoods continue to expand, so does the demand for retail services. More affluent households are residing here, as the metro’s labor force transitions toward high-skill sectors, including health and professional services. The combined benefit to retail operations is illustrated in areas like Schaumburg and Oak Brook, where vacancy rates entering 2023 are lower than their year-end 2019 levels. Nevertheless, strength here will not be enough to withstand stubbornly elevated availability in The Loop and the Magnificent Mile. Declining consumer demand from elevated inflation and a softening labor market are diminishing tenant demand, calling for negative net absorption. The metro, however, records its smallest delivery count since 2007, helping blunt a portion of the impact.