Chicago Neighborhood Retail Hits Near-Record Low Vacancy as Suburbs Boom

Chicago's retail market is telling a tale of two cities: neighborhood and suburban corridors are thriving at near-record tightness, while the Loop and Magnificent Mile continue to grapple with elevated vacancy and sluggish foot traffic.

The Numbers

The metro-wide retail vacancy rate has fallen to 4.9% — approaching a 30-year low. But the strongest performance is concentrated in the city's neighborhood retail corridors:

• Southport corridor: 0% vacancy — every available storefront is leased
• Armitage area: 4% vacancy
• Gold Coast: Asking rents have topped $300 per square foot, the highest ever recorded
• Randolph Street / Fulton Market: Rents ranging from $90 to $100 per square foot

By contrast, the Magnificent Mile still carries a 28.8% vacancy rate (Q3), though that has improved from 33.5% in 2024. The Loop sits at roughly 30%, weighed down by downtown office vacancy of 26.5% that depresses daytime foot traffic for retailers.

Suburban Surge

Suburban retail is booming as well, driven by regional and local tenants expanding across categories including daycares, indoor play areas, pickleball facilities, fitness concepts, restaurants, healthcare and dental practices, personal care services, and drive-through coffee brands like 7 Brew, Dutch Bros, and Scooter's.

Inventory in prime neighborhood locations is described as "extremely limited," particularly for small-shop spaces under 3,000 square feet.

Signs of Life on Michigan Avenue

Despite the elevated vacancy numbers, there are encouraging signals for the Magnificent Mile. Uniqlo is planning to reopen on Michigan Avenue at 600 North Michigan, four years after closing its previous location. Mango and a Harry Potter experiential retail concept have also committed to the corridor.

A tourism rebound is helping: Chicago hotels recorded 3.5 million room nights from June through August 2025, exceeding pre-pandemic records.

Challenges Ahead

High Cook County real estate taxes and operational costs remain a burden for downtown retailers. The primary constraint for neighborhood retail, however, is simply a lack of available space — well-capitalized tenants are competing for a shrinking pool of storefronts.

Looking ahead, the opening of the Bally's Chicago casino along the Chicago River, slated for 2026, could provide an additional draw for the downtown market.