CHICAGO -- North Michigan Avenue seems a little less magnificent lately.
Retail rents fell in 2018 after soaring in recent years, and Chicago's undisputed top shopping destination has faced a long slog in filling high-rent flagship spaces.
The Magnificent Mile's transition is indicative of a broader trend, as "high streets" -- the world's most prestigious places to buy and sell goods -- grapple with massive changes in consumer habits.
The explosive growth of e-commerce and waves of retailer bankruptcies, combined with rents that skyrocketed in recent years coming out of a recession, have pummeled streets known for huge, attention-grabbing spaces. Experts say streets like North Michigan Avenue won't be knocked from their perch as the go-to destinations for retailers and consumers alike, and there already are signs of the Mag Mile bouncing back after a couple of years of slow leasing.
"We've been an owner of Michigan Avenue retail space since the 1970s and we've seen a lot of cycles," said developer Lee Golub of Chicago-based Golub & Co., whose current investments include the ongoing Tribune Tower redevelopment. "Right now you have some spaces that are available. But the need for retail and the need to be on Michigan Avenue, I don't see that going away."
Completed leases for marquee spaces on North Michigan Avenue averaged $450 per square foot in 2018, down from $550 the previous two years, according to commercial real estate brokerage Cushman & Wakefield. The area surveyed was between the Chicago River and Oak Street.
Streets like New York's Fifth Avenue and Miami's Lincoln Road also are feeling the pinch.
"North Michigan Avenue, like many retail corridors in the country where most of the properties are flagship spaces, has been hit particularly hard," said Chris Conlon, chief operating officer of Acadia Realty Trust, which owns three properties on the avenue. "Large-format stores, it appears to us, are the last to move. Those large-format stores up and down North Michigan Avenue have struggled to find their footing."
Manhattan's Fifth Avenue, one of the priciest retail streets in the world, has seen asking rents for the highest-quality spaces fall 11% since prices peaked in the first quarter of 2017, The Wall Street Journal reported in May.
Other top shopping locales, such as San Francisco's Union Square and Rodeo Drive in Beverly Hills, Calif., have remained flat, according to the report.