Chicago, IL, August 05, 2012 --(PR.com
)-- Vacant storefronts across the metropolitan Chicago real estate market are starting to fill up in greater numbers, and rental rates for office space in the area are showing signs of bounce back after several years of decline, according to top commercial brokers with the RE/MAX Northern Illinois real estate network.
RE/MAX agents’ views on retail real estate confirm national trends, with new reports showing that the retail sector throughout the United States is in the early stages of what appears to be a steady but slow recovery.
"We are seeing many new businesses opening in our area," said Al Vallejo, commercial division manager with RE/MAX Synergy in Orland Park, Ill., "and this is a trend that I think will continue."
What are the reasons for this retail growth? Vallejo points to two main factors: The first is that many of those leasing retail space today are first-time business owners who, after being downsized from their most recent jobs, want to take greater control of their careers.
"Many of these individuals are going into business for themselves. That can be a good plan as long as they receive good, sound advice when opening their new businesses," he said.
The second primary factor, according to Vallejo, is that the medical sector is booming throughout the Chicago area and the country, with many doctors, physical therapists and chiropractors opening their own facilities.
"We are seeing a greater demand for space by psychiatrists and psychologists in our area," he said. "People are under a great deal of stress today."
Vallejo's observations fit with the recent retail report compiled by REIS, Inc., a provider of information on the commercial real estate market.
According to REIS, the first-quarter 2012 vacancy rate for retail space across the United States fell to 10.9 percent. That's a drop, albeit a slight one, from the vacancy rate of 11 percent in this sector in the fourth quarter of 2011.
One reason for this small decline in vacancies is the lack of new retail space coming onto the market both regionally and nationally. Developers have not added much commercial space to the market, therefore, vacancy rates have finally stabilized.
Basel Tarabein, a top commercial broker with RE/MAX At Home in Rolling Meadows, Ill., said that he, too, has seen solid growth in his region's retail sector.
"We have been very blessed with a strong commitment from retailers," Tarabein said. "Some are leasing. Some are building new space. We can see that this market is on the edge of booming."
Tarabein points to increased consumer confidence as a reason for the retail recovery. He remains confident the economy will continue its rebound. As that happens, it will have a positive impact on both the commercial and residential sides of the real estate industry, he said.
Of course, property owners must take certain steps to take advantage of the increased activity in the area's retail sector. Namely, they must make sure to offer their space at the right price.
Today's buyers and renters are savvy, said Dave Shalabi, a top commercial broker with RE/MAX Synergy in Orland Park. They won't overspend, whether they're buying retail space or leasing it.
"Buyers and renters are playing it a little safe when it comes to retail," Shalabi said. "They are renting leaner and a little bit smaller than they normally would."
A slower recovery is in the office sector
Tarabein has seen a modest increase in sales and leasing of office space in his market. He added that this sector still has a way to go before it experiences a full recovery.
“I’d say we are seeing a slight increase in office activity,” Tarabein said. “The economy is improving. People are seeing this, and they are making moves they had been putting off. I think we’ll continue to see higher demand for office space as the months pass.”
The average vacancy rate for Chicago-area office space stood at 14.2 percent at the end of the second quarter of this year, compared to 14.8 percent a year earlier, according to the Mid-Year 2012 Chicago Office Outlook by Transwestern and Delta Associates, which offered encouraging news for landlords. For example, the report noted that over the last 12 months vacancies dropped from 12.5 to 11.8 percent in the Central Business District (CBD) and from 16.5 to 15.8 percent in the suburbs.
Transwestern reported that asking rents for office space climbed 1.3 percent in the CBD and 2 percent in the suburbs during the first half of 2012.
RE/MAX has been the leader in the northern Illinois real estate market since 1989. The RE/MAX Northern Illinois network, with headquarters in Elgin, Ill., consists of 2,100 sales associates and 110 individually owned and operated RE/MAX offices that provide a full range of residential and commercial brokerage services. Its www.illinoisproperty.com and www.remax.com websites are leaders in consumer visits among real estate franchise brands.
Its mobile search, m.illinoisproperty.com, allows users to conduct real estate searches on any mobile device with Internet access. The northern Illinois network is part of RE/MAX LLC, a global real estate organization with 88,000 sales associates in 90 nations.