ETI Blog

Aldi, Jewel-Osco, and Whole Foods Are Racing to Build in Chicago Again, and the Construction Behind It Is Not a Standard Retail Buildout

For most of the past two years, grocery real estate in Chicago barely moved. Everyone was waiting to see what would happen to Kroger's attempted merger with Albertsons, the deal that would have combined the parent companies behind Mariano's and Jewel-Osco. When that merger collapsed in late 2024, the waiting stopped. Grocery chains that had been sitting on expansion plans started signing leases again, and Chicago is one of the markets where it shows the most.

Nationally, grocers are planning close to 21 million square feet of new store space in 2026. Chicago is getting a real share of it, and the construction behind these stores is more involved than most retail tenant improvement work. A grocery buildout is closer to a small industrial project than a typical storefront.

Why the Chains Are Suddenly Building Again

The collapsed merger reopened a competitive field that had been frozen for two years. On top of that, at-home dining has stayed strong even as restaurant traffic has normalized, which keeps grocery sales healthy enough to justify new store investment. Aldi alone is planning more than 180 new stores across the country in 2026, and Chicago is getting several of them.

Aldi Push Into Downtown Chicago

Aldi has quietly become one of the most active grocery developers in the city. The chain signed a 15-year lease for 22,000 square feet on West Jackson Boulevard in the West Loop, where it will anchor the ground floor of a new 380-unit apartment building set to open in 2026. That is a meaningfully different kind of deal than Aldi's traditional suburban standalone box: ground-floor retail inside a residential podium, built alongside the apartments above it rather than as a separate structure.

Aldi also recently opened a 25,000 square foot store at 30 West Huron Street in River North, taking over a space that Whole Foods had vacated. Backfilling a former Whole Foods location means adapting an existing grocery infrastructure, refrigeration lines, loading dock, floor drains, rather than starting from a blank commercial shell. That is its own kind of construction problem, closer to a gut renovation than new construction.

Jewel-Osco Returns to Woodlawn

On the South Side, Jewel-Osco is building a new 48,000 square foot store at the northwest corner of 61st and Cottage Grove in Woodlawn, including a 24-hour drive-through pharmacy. A store that size, with a pharmacy drive-through built in, requires site work most retail projects never touch: traffic flow planning, a drive-through lane that does not conflict with parking or loading access, and pharmacy-specific security and refrigeration requirements layered on top of the grocery scope itself.

Whole Foods and Mariano's Follow the Same Playbook

Woodlawn is not an isolated example. Whole Foods opened in Englewood and Mariano's opened in Bronzeville within the same general window, both neighborhoods that had gone years without a full-service grocery option nearby. Grocery chains follow rooftops and disposable income, and the fact that three different chains are independently making the same bet on the South Side says something real about where the demographic and investment data is pointing them.

What Investors Are Paying for This

The investment side confirms the same story. Barings paid $54.5 million for Market Meadows, a 149,185 square foot grocery-anchored retail center in Naperville, acquiring it from ownership that had held the property since 2021. Grocery-anchored centers are trading at cap rates around 6.7 percent nationally, with Aldi-anchored properties trading in the low 6 percent range, tighter than most other retail anchor types. Investors are also actively hunting partially vacant and value-add centers, underwriting them to higher going-in yields with the expectation that landing or upgrading a grocery anchor will compress that yield once the lease is signed.

That investor appetite matters for anyone doing work on retail and mixed-use projects in this market. A property owner trying to land a grocery anchor, or reposition a center around one, is competing for a tenant that has options right now and can be selective about which sites are worth the buildout cost.

Why Grocery Construction Is Not a Standard Retail Buildout

A grocery store is one of the most complicated retail buildouts in commercial construction, and the cost reflects it. National average construction costs for a grocery store run around $215 per square foot in 2026. A discount format like Aldi, with simpler refrigeration and a smaller prepared food footprint, usually runs $140 to $175 per square foot. A full-service conventional supermarket lands between $200 and $250 per square foot. A specialty format with a real bakery, deli, and prepared food program can push past $280 per square foot.

The reason for the spread is the infrastructure behind the sales floor. Commercial refrigeration systems, specialized HVAC sized for refrigeration loads, loading docks built for daily delivery volume, floor drains and specialized flooring in food prep areas, and electrical and plumbing systems sized well beyond a typical retail tenant all have to come together correctly. Get any one of those wrong during construction and the store cannot open on schedule, or worse, fails a health department inspection after it does.

What This Means for Developers and Property Managers

For developers building ground-floor retail into a residential or mixed-use project, landing a grocery anchor like Aldi changes the construction sequence. The grocery space needs its utility infrastructure roughed in early, sized correctly for refrigeration and food service loads, well before the tenant's own buildout begins. Get that wrong and the grocer's contractor is stuck retrofitting systems that should have been planned from the start.

For property managers repositioning an existing center around a grocery anchor, the backfill scenario matters just as much. A vacant former grocery box, like the Whole Foods space Aldi took over in River North, comes with existing infrastructure that has to be evaluated honestly. Sometimes that infrastructure is a head start. Sometimes it is outdated in ways that cost more to retrofit than starting clean would have.

What Comes Next

With the merger fight behind them and at-home dining still strong, grocery chains are not slowing down in Chicago. Expect more ground-floor grocery deals tied to new residential construction, more South Side and West Side openings following the Woodlawn, Englewood, and Bronzeville pattern, and more investor capital chasing grocery-anchored centers at tightening cap rates. For anyone doing retail or mixed-use construction in this market, grocery tenants are worth understanding as their own category, not a generic retail buildout with a bigger walk-in cooler.

Building or Backfilling a Grocery-Anchored Space?

Grocery construction has its own rules: refrigeration loads, loading dock geometry, health department requirements, and a tenant that needs to open on schedule to hit its own lease obligations.

If you are planning ground-floor retail around a grocery anchor, or evaluating a mixed-use residential project with grocery on the podium, we would like to talk through the scope before the infrastructure gets roughed in.

If you are working on a grocery-anchored retail project in Chicago, walk it with us. Request a walk