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Chicago Retail Construction News and Trends – 2011 Updates

Many shopping center landlords are no longer assuming responsibility for store construction costs, but instead offering higher tenant concessions.

Many shopping center landlords are no longer assuming responsibility for store construction costs, but instead offering higher tenant concessions.

Now that spring is officially here, I wanted to reflect on the Chicago retail construction trends and news we’ve seen so far in 2011. From the new commercial construction projects we know are in the pipeline, to what I heard at the recent Bisnow Chicago Retail Summit, I am cautiously optimistic.

Good News/Bad News.

The good news is the volume of new commercial construction projects we’re bidding on is on track with 2008, which means the market is moving in the right direction. The bad news is the number of Chicago general contractors bidding on jobs has increased.

The first round of hhgregg stores in Chicago had eight commercial contractor bids per job, while the second wave of stores is averaging 11 bids per site. The fact is, there are too many GCs bidding on new retail construction jobs and commercial developers and shopping center landlords are the ones paying the price.

We still see retailers/landlords/owners take bids from the best Chicago contractors as well as pick-up truck GCs. The latter are often awarded jobs due to low commercial construction costs. But as the saying goes, you get what you pay for, so it’s not surprising when we’re brought in to re-do or un-do the work of the pick-up truck GCs.

But I cannot underscore how great it is for Chicago’s retail market to see a brand like hhgregg come into town and burn up square footage. This is especially positive commercial construction news given the first quarter announcements of Borders, Blockbuster and Barnes & Noble closing all, many or some of their stores.

The Loop.

There have been other promising retail construction trends in 2011. It looks like we’ll finally see new Walmart stores in Chicago, including a Neighborhood Market at Prudential Towers. State Street got a shot in the arm from CityTarget. And while we’ve seen the ownership of Block 37 change hands, the bottom line is Larry Freed got the project done. Eventually the entire shopping mall will be leased and State Street will once again become a retail mecca.

Michigan Avenue. While there weren’t a lot of new Michigan Avenue construction projects announced this first quarter, work is underway at AllSaints, TopShop and Rolex. And pre-construction commercial services are probably in play for Uniclo as we’ve heard it is shopping the Magnificent Mile, as is a national maternity chain.

Chicago Suburban Shopping Centers. At the Bisnow Retail Summit, there was a lot of emphasis on city projects, but we’ve been just as busy on new suburban Chicago retail projects. One shopping center construction trend we’ve noticed is a shift in responsibility for shopping center construction services. Last year, landlords wooed tenants by assuming responsibility and mall construction costs to build out a retailer’s space. Now, owners/landlords are scaling back on their burdens by giving higher tenant concessions so retailers are responsible for their store’s construction.

It will be interesting to see how Chicago’s retail market progresses in 2011. But one thing I am certain about is that retail construction is constantly re-inventing itself because retailers need to stay current with new store concepts, brands, services and designs. And speaking of new retail concepts to hit Chicago, we’ve got a doozey to announce this second quarter. Stay tuned.

Bill Di Santo


Tel: 847-233-9200 x710

Questions? Comments? You can reach me at bill.disanto@englewoodconstruction.com



  1. Seems like that outlook for 2011 is right on track with several other areas as well. The West seems to be having the same type of action as well. Lets hope things develop into what we hope for and the building keeps going up up up! Dave