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Retailers Heading for the Suburbs Focus On Small, Boutique-style Outlets

Early in the pandemic, the Great Migration began in Illinois as thousands of Chicagoans decamped for new digs in the outlying suburbs. Yet urban dwellers weren't the only ones taking part in this exodus — retailers soon followed suit.

In particular, DuPage, Kane, and Lake counties have seen significant spikes in retail activity, especially when compared to more urban Cook County where landlords have less flexibility to make tenant concessions due to higher overhead costs. Despite a recent bounce from city shoppers returning to pre-pandemic habits, the retail sector in Chicago continues to lag. The loop's retail vacancy rate now sits at 28%, and may go higher.

Meanwhile, Chicago's suburbs absorbed 3.3 million square feet of retail space in 2022 with vacancies dropping 20 basis points below pre-pandemic levels. Some retailers are selecting suburban locations because they have the highest density of online purchases, dovetailing with the increasingly popular strategy of integrating online fulfillment with brick-and-mortar outlets. Whatever their reason, it is a migration pattern the retail industry is witnessing not only in Chicago but in major urban areas from New York City to Portland.

Open-Air Lifestyle Centers

For retailers that have selected a new space outside the city, obsolete large-format stores are being eschewed in favor of smaller, boutique-style outlets that meet suburban tastes. At the forefront of this movement is the "open-air lifestyle center," a mixed-use experience where shoppers can dine, catch a movie, watch a concert, exercise at a fitness center, go to the doctor, or even live where they shop.

Along with offering convenience and variety, open-air lifestyle centers make shoppers feel safe, comfortable, and welcome — the very things that drove many former urban dwellers into the suburbs in the first place. The more comfortable the shopper feels in the store, of course, the more apt they are to linger, creating more opportunities for the sales team.

Taking their cue from successful restaurants and hotels, retailers are adding cozy features that feel authentic and sophisticated. These include plank wood or raw concrete flooring, more natural lighting throughout the store, earthy tones infusing walls with warmth and energy, and non-traditional retail furniture choices complete with lush sofas, weathered leather chairs, and wooden tables draped with ornate fabric to display goods instead of cold metal shelves. Rough stonework and water features can also bring a space to life, creating a feeling of refuge from the ordinary.

Amidst these organic touches, technology is being made available blurring the lines between online shopping and the physical retail space. Mobile point-of-sale technology brings the checkout line to the customer, rather than vice versa. Transactions are conducted via iPads while seated on a sofa or at the in-store coffee bar. Video monitors that convert to mirrors are another trend to watch.

Major retail brands, middle market shops, and tiny mom-and-pop stores are increasingly choosing suburban locations, not just in Illinois but nationwide. If you are looking for a partner to renovate a retail space, contact Cicero Construction Group.

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