Chicago: A diverse economy blows through the Windy City
The Chicago metro area has seen its share of ups and downs, but it always seems to bounce back stronger than before.
The area includes about 9.5 million people and has the third-largest metropolitan area nominal gross domestic product at $670.5 billion in 2017, an increase of about 3% over 2016. It is considered a highly-diverse economy, and is home to the headquarters of 57 Fortune 1,000 companies, including Deerfield, Ill.-based Walgreens.
In addition to its status as a transportation and distribution hub, the Chicago area is home to major food processing, manufacturing, printing, publishing, finance and insurance businesses. In fact, Chicago’s economy reflects, to a large degree, the U.S. economy overall, with no single industry making up more than 12% of employment, according to local business leaders.
Chicago also has seen an influx of digital innovation, with an average of more than 300 new digital start-ups launched per year between 2011 and 2016, according to public-private nonprofit World Business Chicago.
The Chicago area has seen a fair number of retail closures in recent years, even amid new store openings. The exit of grocer Dominick’s contributed to an overall decline in square footage in the city and its close-in suburbs.
“The combination of nearly 1 million sq. ft. of Dominick’s space being absorbed by the market leaders over the past 24 months, combined with short-term bankruptcies and the ever-present threat of Amazon’s launch into grocery, has created a stall and step backwards in urban Chicago,” said Dan Tausk, principal and director of urban tenant brokerage at Mid-America Real Estate, who authored a recent study of
the market along with intern Dan Maentz.
The bankruptcy of the Central Grocery cooperative last year also added some turmoil, forcing its 400 independent members left to find new supply sources. That also led to the closure of three Ultra stores and one Strack & Van Til store Central had operated. Other recent closures included two of Meijer’s small-format locations, though it maintains a strong presence in the Chicago suburbs. Walmart also recently closed two Neighborhood Market stores and all of its Walmart Express locations.
Chicago has long been a leading market and a testing ground for Walgreens, and in 2012 the chain built a new flagship location on the corner of State and Randolph where a Walgreens store had stood from 1926 to 2005. Walgreens has debuted several initiatives in the market, including its first click-and-collect service in 2011 and what is believed to be the first net-zero energy store in the U.S., in Evanston, Ill.
Among the other drug chains, CVS Pharmacy has less than half the presence of Walgreens, according to reports, while Camp Hill, Pa.-based Rite Aid has no stores in the market, though its pending acquisition by Albertsons could bring its presence to the Boise, Idaho-based grocer’s Jewel-Osco chain — one of the longtime leading food retailers in the market, with 51 stores in the city and the close-in suburbs, according to the Mid-America report. Aldi, based in nearby Batavia, Ill., had 49 stores.
The market also is home to Kroger banner Mariano’s Fresh Market, which is expanding with large, experiential stores throughout the market. In the past year, new stores from both Mariano’s and Whole Foods have opened in the region.
“Gourmet grocery will continue to drive shopping center growth and provide an anchor for higher-end, junior-box tenants in the Chicagoland area,” said Andy Bulson, a principal in Mid-America, in a report on the Chicago shopping center growth outlook.
In addition, Target has been one of the more aggressive retailers in the Chicago area, with eight of its smaller-format stores already open and at least one more planned for 2018.