An excess in anchor retail space

Demand for large retail space in Chicago-area shopping plazas is weakening, according to a market survey that raises questions about a segment of the economy.

The firm CBRE Inc. said vacancy in anchor retail spaces, generally 20,000 square feet or more, increased in the last 12 months. “Anchor store closings have increased and surpassed openings for the first time in three years,” said Joe Parrott, senior vice president at CBRE. “Contrary to expectations that we were heading towards a landlords’ market, it appears that the recovery has stalled.”

The report said 7.5 million square feet of anchor space is available in the Chicago area, vs. 7.2 million square feet a year ago. In 2009, after the financial collapse tied to the Great Recession, CBRE measured the vacant space at 10 million square feet.

Parrott said Borders, Lowe’s, Dominick’s and Bally Fitness were among the operators that left behind large blocs of space since early 2011.

Retailers coming into the market include health clubs, Ross Dress For Less and Hhgregg. Parrott said fitness clubs, once shunned by retail landlords, are now welcomed for the daily traffic they draw to properties.

But the pessimistic tone of the report caught other retail brokers by surprise. Michael Havdala, senior vice president at HSA Commercial, said it may come down to the old real estate emphasis on location.

“I think the good spaces are probably gone,” he said, referring to sites that are in the city or close to it. Difficulties persist with exurban bigbox locations, Havdala said.

As the economy soured, bricks-and-mortar retailers also battled Internet shopping, the housing collapse and spikes in gas prices.