Helping Small Businesses Navigate Rising Costs of Rent

Before they became some of the biggest commercial corridors in Chicago, neighborhoods like Fulton Market, Bucktown/Wicker Park, and Southport Corridor were filled with local businesses. These mom-and pop-shops and restaurants helped to give these neighborhoods their charm and character, increasing their desirability to the brand-name national retailers that are pricing them out of the market.

Now, the rising commercial rents in these areas are making it increasingly difficult for small, independent businesses to get their start, remain in their same location and stay afloat. In some areas, existing businesses have watched their rent triple over the past six years, leading otherwise successful businesses to shut their doors. 

The steep cost of rent (as much as $100/SF in some of the hottest commercial corridors) has also created a significant barrier to entry for those trying to start a new business. Business owners that want to be located in highly desirable areas often start their businesses deep in the red, because they take on unsustainable rental costs. Add to that the increased cost of wages and benefits for their employees, and most new businesses are set up to fail before they get a chance to succeed.

Local businesses aren’t the only ones to suffer the effects of the rising cost of rent. It takes a toll on the neighborhood, as the diversity of shopping and dining options diminishes and more and more storefronts become vacant. Many of these spaces can remain vacant for some time, impacting the adjacent businesses by driving down pedestrian traffic.

While there is no quick fix, there are a few options that local businesses can consider:

Look for space off the main corridor

Often times looking for space within the same neighborhood, but a few blocks away from the main drag, can allow a business to reap the benefits of the desirable area without paying a premium for rent. 

Partnering with a developer or landlord

While taking on a partner may not be the first choice for a new business owner, it can allow them to be located in a space they would not be able to afford otherwise. This may not be an option for every business, but if the developer or landlord sees promise in a company, it can be a good investment for them in the long run because it will increase the property value and return. 

Hiring a commercial real estate broker

Both new and existing local businesses can benefit from consulting with a commercial real estate broker on their search for space. Not only can a broker help you navigate an incredibly competitive commercial real estate market, but they can also steer you away from signing a lease you can’t afford and present other great alternatives. Brokers can also help your make sure that when you do sign a lease, it is right for your business in both the short and long-term.

Looking for a commercial real estate broker in Chicagoland? Millennium Properties is a full-service commercial real estate firm with experience leasing space in all types of properties. Give us a call today and we will help tailor a strategy to address the specific needs of your business.