Two relative upstarts in the upper crust of retailing districts, Chicago’s North Michigan Avenue and San Francisco’s Union Square, are getting king’s ransoms for store space, while once ultra chic Rodeo Drive in Beverly Hills is excepting pauper’s wages for space.
A new study from Grubb & Ellis shows that both Michigan Avenue and Union Square have posted significant rental rate increases since 1988, while Rodeo Drive has fallen precipitously.
Michigan Avenue retail rents have doubled in the period surveyed, to as high as $175 per square foot from a range of $75 to $85 six years ago. Union Square has seen rents rise by more than 50 percent, to as high as $300 per foot from $175 in 1988.
Rodeo Drive, on the other hand, is down and out. Retail rents on the street have fallen to between $96 and $144 per foot from their highs of between $168 and $216 per foot at the height of the 1980’s real estate boom.
Two other major retailing districts saw rents remain flat over the period studied-New York’s Fifth Avenue, with rents $400 to $600 per square foot, and Boston’s Newberry Street, where figures were unavailable.
Despite the high costs, demand for space is great in all the districts except Rodeo Drive, Grubb & Ellis brokers said. Michigan Avenue has virtually no street level space available, according to retail specialist Paul Bryant, and the only way to get space on Union Square is to convince another store to leave, said broker James Swathout.
Brokers say the tenant profile of these streets is also beginning to change. In addition to the upscale staples of Armani, Gucci and Chanel, mid-priced stores such as The Gap, Pier 1 Imports and Casual Corner are moving in to these high-rent locales.
Entertainment-oriented retailers, such as Nike Town, Disney Store and Warner Brothers Studio store, are also clamoring for space.
“Regional malls are saturated and national retail chains have turned to these locations to maintain their companies’ expansion plans,” said Rick Carduner, Grubb & Ellis’ national retail council co-chairman.
Furniture polish
Ground has been broken on a 57,000-square-foot warehouse and showroom addition to the Darvin Furniture Store, 15400 S. LaGrage Rd. in Orland Park, the second expansion of the furniture retailer in three years.
James Waner, president of Palos Heights-based Waner Enterprises Inc., which is the general contractor for the project, said the addition will include new warehouse racking systems and 25,000 extra feet of showroom space for Darvin’s factory direct outlet business.
Waner, whose firm built a 25,000-square-foot warehouse addition in 1991, said the latest expansion is expected to be completed by December. Phillip J. Riley of Palos Heights is the architect for the project.
Other leases and sales
– First Industrial Realty Trust has purchased the Transportech Center in Lincolnwood for an undisclosed price. Bennett & Kahnweiler, which represented the seller The Alter Group, said the 205,000-square-foot multitenant facility is 95 percent leased.
– Columbia Graphics, which offers pre-press services, has purchased a 142,600-square-foot industrial building at 2900 N. Paulina Ave. in Chicago, just up the street from its current location at 2640 N. Paulina, according to Paine/Wetzel Associates Inc., the sales agent for the property.
– Menlo Logistics Inc., which distributes office supplies and equipment to Midwest Office Max stores, has leased 124,000 square feet of warehouse space at 2255 Sullivan Rd. in Aurora. Dolan & Murphy, which announced the deal, said 36,000 square feet of office space remain for lease in the former Chicago Sun-Times distribution facility.
– CenterPoint Properties, a Chicago-based real estate investment trust, has purchased the former Ducks Unlimited headquarters at One Waterfowl Lane in Long Grove. According to Cushman & Wakefield Inc., the asking price for the 54,000-square-foot facility on 10 acres was $3.6 million. The building was leased to Japanese medical diagnostics firm Sysmex Inc. following Ducks Unlimited’s relocation to Memphis.
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Steve Kerch’s columns appear in Real Estate on Sunday and in Your Money on Thursday.
