State Street Retail Vacancy Rates Decline in 2025
As more residents move into the Loop, retail occupancy is improving for Chicago's primary shopping district.
Updated on Oct. 21, 2026 in Commercial
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Retail vacancy rates on State Street dropped to 28.8 percent in 2025, down from 35.1 percent the previous year. This recovery for the Chicago shopping corridor is being driven by an influx of new residents moving into redeveloped office towers.
Why it matters
The retail market's stabilization signals a shift in the local economy as office-to-apartment conversions bring more foot traffic to the Loop. This population growth is beginning to lure retailers back to State Street, potentially altering commercial property values and consumer access.
Retail vacancies on State Street fell to 28.8 percent in 2025, improving from 35.1 percent in 2024. Across the broader Loop, vacancy rates also declined to 24.7 percent in 2025 from 26 percent the year prior.
The players
Old Navy
A national clothing retailer that leases commercial space and manages store footprints.
Edwards Realty
A real estate investment and development firm focused on retail property acquisition.
The details
The improvement follows a challenging period where vacancy rates spiked significantly above their 2019 baseline of 15.2 percent. Retailers are responding to the increasing residential density created by the conversion of vacant office towers into apartments. Additionally, major redevelopments like the one at Block 37, which is slated for a $25 million investment after selling for 36 percent of its previous price, are providing new infrastructure for incoming businesses.
Timeline
2019: State Street retail vacancy rate was 15.2 percent.
2023: Old Navy vacated a 32,000-square-foot space on State Street.
2024: State Street retail vacancy rate hit a peak of 35.1 percent.
2025: State Street retail vacancy rate dropped to 28.8 percent.
2026: Old Navy announced a return to a 13,000-square-foot space.
Money Landscape
The retail recovery follows the ongoing trend of office-to-apartment conversions revitalizing the Chicago Loop. These physical changes mark a departure from the high vacancy peaks seen in 2024, aligning with broader city efforts to boost residential density in downtown corridors.
Shoppers and residents in the Loop may see more retail options emerging as vacancy rates decline. These trends suggest a stabilization in the local commercial environment, though property investment remains complex and should be discussed with a qualified professional.
The takeaway
The return of national retailers like Old Navy to smaller, more targeted footprints on State Street highlights the changing demands of downtown consumers. Keep an eye on regional commercial vacancy reports to track how residential shifts continue to influence local property demand.
Further reading
For more on local business trends, see our Commercial section.
Source note: This article includes information reported by The Real Deal New York.
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