WWD.com/retail-news/retail-features/retail-districts-grow-in-chicago-490594/
government-trade
government-trade

Retail Districts Grow in Chicago

Less than satisfied with her real estate broker's recommendations for a new store location here, the designer got a guidebook and began scouting neighborhoods herself.

View Slideshow

CHICAGO — Nicole Miller decided to take matters into her own hands.

Less than satisfied with her real estate broker’s recommendations for a new store location here, the designer got a guidebook and began scouting neighborhoods herself, finally settling on Wells Street, a tree-lined thoroughfare in the Old Town neighborhood that was known more for restaurants than retailing.

Miller’s decision to abandon fashionable Oak Street, where neighbors included Hermès, Prada and Kate Spade, when her lease expired last August after eight years, reflects the desire of many designers and retailers to find neighborhoods that help generate freshness and new customers. Whether in Old Town here or the Meatpacking District in lower Manhattan, these merchants are looking for offbeat, quirky and distinctive locations.

Although space along Michigan Avenue’s famed Magnificent Mile here, as well as on Oak Street, remains in high demand, a handful of thriving neighborhoods have developed here that were blips on the retail radar until residential construction boomed in recent years and led to gentrification. This occurred as some merchants sought alternatives when rents reached $400 per square foot along Michigan Avenue and $200 per square foot on Oak Street, where Jimmy Choo took Nicole Miller’s former space, Harry Winston and Bebe plan to open this year and Barneys New York is doubling in size.

“Developers are looking to develop communities that cater to the consumer and keep them in the neighborhood,” said Melissa Turner, Chicago’s director of fashion, arts and events. “They’re looking for a portfolio of business and residential.”

And residents want more close-to-home retail options in gentrifying Chicago neighborhoods like Old Town, Bucktown and Lake View.

“Everybody is looking for a new opportunity where [retail] rents aren’t so crushing and they’re going to where their customer is,” said Keven Wilder, a Chicago retail consultant.

Miller said her two-level, 2,400-square-foot store, which opened in October, is projected to generate $1 million in its first year, an increase of about $250,000 from the almost 2,000-square-foot Oak Street location.

“I’m drawing people who haven’t been in the store for a while,” she said. “We’re revitalized.”

Miller has company in seeking a new retail path in Chicago. Anthropologie became the first national retailer last December on Southport Avenue in the Lake View neighborhood, and Marc by Marc Jacobs plans to become the first national name on Damen Avenue in Bucktown this fall. Since the Jacobs announcement, BCBG and Nanette Lepore have planned to locate on Damen.

Around the corner, on Milwaukee Avenue, Scoop, Urban Outfitters, American Apparel and G-Star all opened in recent years, and Free People is to open its first Chicago store on the street this summer.

“It’s part of a national trend,” said Lorraine Adney, vice president of the McDevitt Co., who brokered deals here for Anthropologie and Marc by Marc Jacobs. “Everyone is trying to get back to Main Street America.”

“If you look at the big picture, national retailers are focusing on neighborhoods and streets, where it used to be malls and lifestyle centers,” Adney said. “In Chicago there is a great residential population base in these neighborhoods and these people are not going to go to the suburbs to do their shopping.”

Some of the priciest properties and neighborhoods in Chicago, such as the Gold Coast on the near North Side, are closest to Lake Michigan. However, as residential construction took off, developers ventured farther north and west, transforming areas like Lake View’s Southport Avenue and Bucktown and Wicker Park from places where recent college grads could find cheap rents to areas dominated by condominiums and townhouses starting at $400,000.

At the same time, the city’s restaurant industry and theater community have prospered. “Arts and culture found a home in neighborhoods they didn’t have before in the city,” Turner said.

And national retailers have viable options to Michigan Avenue, Oak Street and Lincoln Park.

“It shows you the retail strength of the city,” said Mayor Richard Daley, who attended Miller’s store-opening party on Wells Street, and has created an advisory council to promote the fashion and retail industry.

In her own journey to grow, Miller recalled her broker and others pushing Lincoln Park, where rents on the main drag, Armitage Avenue, are about $70 per square foot. The street is home to Cynthia Rowley, Kiehl’s and a new Intermix store. However, some residents and even merchants said the street had lost a bit of its authentic neighborhood appeal because of the national names.

“Everyone was saying ‘Armitage Avenue,”’ Miller said, “but I wasn’t getting the right vibe.” That’s when she scoped out Wells Street, which for Miller evoked memories of when she opened her store in Manhattan’s SoHo.

“There are a lot of young families and professionals in their 30s and 40s, well-educated in terms of art and design,” Turner said. “It’s very much an area of trendsetters or trend followers that appreciate the quality Nicole Miller can bring. In terms of demographics, it really fits.”

Adney said Anthropologie executives initially expressed interest in Lincoln Park because it was more established with national retail, and Bucktown because of its industry buzz. Regarding the eventual decision to open in Southport, she said, “There was a bit of an education process.’

Once the executives visited the street, where rents approach $40 per square foot, they understood its attraction. “This seemed like a happy marriage,” Adney said. “There are so many young women and young moms with strollers on the street. There is a really great core Anthropologie customer.”

Southport Avenue has evolved from a post-college haven for single renters who frequented the sports bars and enjoyed the accessibility to Wrigley Field. As those renters grew older and more prosperous, they stayed. More restaurants opened, independent retail joined in and housing prices continued to climb as residents married and had kids. Now it’s more common to see moms in designer denim pushing Bugaboo strollers than post-frat guys in Big Ten baseball caps high-fiving their friends.

The street already has proved profitable to independent retailers. Krista K boutique, known for its feminine lines like Rebecca Taylor, and Jake, a men’s and women’s boutique carrying 3.1 Phillip Lim and Thread Social, have expanded. Krista K opened a second store on Southport Avenue focusing on maternity and baby fashions and Jake launched two more locations on the Gold Coast and in suburban Winnetka, Ill.

“At first, people were freaking out,” said Jake owner Lance Lawson about the 7,000-square-foot Anthropologie opening nearby. “But it’s been a terrific thing. We’ve seen an increase in walk-in traffic since they opened.”

Miller’s neighbors reported similar benefits.

“It’s a real plus,” said John Liberty, owner of Handle With Care, a Wells Street boutique celebrating its 26th year in business. “It’s good to have that name here,” said Liberty, who sells $48 Velvet T-shirts, $198 Habitual jeans and dresses by Jill Stuart for $398 to $550. “It brings more recognition to the street and her space is such that it’s in keeping with the neighborhood.”

Miller believes her store fits better in the Old Town neighborhood, where retail rents are about $30 per square foot. On Oak Street, parking was scarce and tourists were plentiful. “We had to get a person to drive cars around while people shopped,” Miller said. “Tourists are great, but I’m much happier to tap into our Chicago customer.”

In trendier Bucktown, shop owners are “optimistically curious,” about Marc by Marc Jacobs unveiling its 4,000-square-foot store — its first in Chicago — in the fall, said Stephanie Sack, owner of Vive La Femme, a plus-size boutique on the street where rents have reached $50 per square foot.

“To say I’m three blocks away from Marc by Marc Jacobs, that’s rubbing shoulders with people I want to rub shoulders with,” she said. “I think it’s a compliment to the neighborhood.”

Brokers see more untapped retail potential in the city’s Lincoln Square neighborhood, where restaurants are plentiful but retail is lacking, and along Chicago Avenue.

“The more established a neighborhood gets, for certain retailers, it’s no longer cool enough,” Adney said.

View Slideshow