Why The Magnificent Mile’s 900 North Michigan Mall Is Booming

Then, in April, New York-based Brookfield Property Partners sold its stake in Water Tower Place to its lender, MetLife, in recognition that the mall was worth less than the debt owed on the property.

Going around both malls will take time and money. Their verticality adds to the challenge: while it makes sense to have multiple floors of retail space in a city where land is scarce and expensive, persuading shoppers to climb multiple escalators to find a store has always been a challenge. It’s only gotten harder with the rise of online shopping, which has made shoppers value convenience even more.

Brokers say North Michigan Avenue suffers from an overabundance of vertical commercial space, predicting owners of North Bridge and Water Tower will reallocate some of their upper-floor space to other uses, including entertainment .

JMB doesn’t have to think about it for now. The company spent $52 million on a major renovation at 900 North in 2018 that is now paying dividends.

Figures from Placer.ai, an analytics firm that tracks pedestrian traffic in malls using location data from mobile devices, confirm that the mall fared better than either North Bridge or Water Tower. In the first seven months of the year, foot traffic at 900 North is down 17.4% from the same time in 2020. But it’s down 33.4% at North Bridge and 49.9 % at Water Tower.

The 900 North Michigan mall caters to a more affluent clientele than other Mag Mile malls, an advantage in today’s market. Luxury retailers have prospered for the past couple of years or so, while many mid-size stores have struggled. Chains like Banana Republic, Riley Rose and Abercrombie & Fitch, for example, have closed stores in Water Tower. The mall is now only 46% occupied, according to Cushman & Wakefield.

Many luxury tenants, including Cartier and Chanel, have since left the Mag Mile for Oak Street, which has flourished over the past two years. Being just a block from Oak Street is another perk for 900 North, close enough to attract high-end shoppers who seem oblivious to inflation and recession fears. Luxury retailers like the location because they can rent space for less than they would pay for storefront space on Oak or Rush streets, says broker Luke Molloy, the office’s senior vice president. of Chicago from CBRE.

“It’s a much cheaper Gold Coast option – you get access to the same customers,” he says.

More luxury retailers mean higher sales per square foot, a key figure that factors in how much rent a tenant can afford. Excluding Bloomingdale’s, retailers on 900 North saw sales of $890 per square foot, down from $820 in 2020, according to brokerage Greg Kirsch, executive managing director of Cushman & Wakefield’s Chicago office. Water Tower sales per square foot totaled $609 before the pandemic, he said.

Unlike Water Tower, which lost Macy’s in 2021, 900 North also enjoyed a healthy department store. Bloomingdale’s expanded in 2020, when it closed a separate home furnishings store in the Medinah Temple in River North and created a new home goods department at 900 North.

The move “was huge,” Meara said, increasing traffic in the mall and allowing JMB to rent space nearby to tenants in complementary properties, like Scandia Down. “You get a lot more cross-shopping.”

JMB has also made a deliberate effort to attract tenants who cater to locals rather than visitors. In addition to Equinox, the 900 North Michigan mall includes a Tricoci Salon & Spa, a tailor, and a music school. The focus on the neighborhood was a key reason Janet Mandell, a boutique that leases luxury clothing brands, leased 7,100 square feet of space on the 6th floor of the mall which will open this fall.

“It’s more community-based, whereas Water Tower and North Bridge are more touristy,” says owner Janet Mandell.

The mall can also attract the kind of affluent, social clientele she’s trying to reach: It costs between $500 and $1,000 to rent a dress and matching pair of shoes from her shop.

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