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Chicago’s Magnificent Mile no longer a sure bet for retail landlords

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Boulevard has taken a few steps in the right direction.It’Sugar, Foxtrot, ice cream museum When Aritzia We leased space on North Michigan Avenue in the past year.

But the shopping precinct that stretches north of the Chicago River to Oak Street can’t be fueled by retailers alone. Panel formed by the Urban Land Institute, March Published 31-page report Along with recommendations on how to rejuvenate North Michigan Avenue. Solutions included crime prevention measures and new physical features such as a footbridge extending to Oak Street Beach.Others see promise in filling empty retail space experience attractions, The show “Prince: The Immersive Experience” at North Bridge.

Markets on North Michigan Avenue could also benefit from contraction. Kirsch said the district has too much retail space, especially in buildings with multiple floors. Today’s retailers are very cautious in favor of smaller, more prominent spaces on the ground floor. Spaces above the second floor are much harder to rent than they used to be.

“There is very little demand for multi-level flagship stores,” says Kirsch.

It’s a matter of 830 N. Michigan, an empty four-story building across from Water Tower Place. The same is true for the building next door at 840 N. Michigan. Swedish apparel chain H&M scheduled to be closed Find a four-story, 60,000-square-foot store in the building, and a smaller space nearby, leaving just one Verizon tenant occupying about 27,000 square feet.

Real estate was very valuable years ago when the market was strong. The 117,000-square-foot UNIQLO building $166 million In 2013, a New York investor paid $144 million Acquired an 88% stake in 840 N. Michigan in 2014.

However, in today’s slow market and so many vacancies, their value has fallen significantly. That’s one reason why they’re both logical redevelopment candidates. Developers may pay more for either building, or both, than it is worth for the opportunity to demolish them in their current state and build multi-purpose towers on the block. The tower will almost certainly include retail space at its base, but only less.

New York-based Brookfield Property Partners’ 830 N. Michigan owner put the property up for sale, So it’s possible that developers will buy it with plans to build skyscrapers there. Executives at White Plains, New York-based Acadia Realty Trust, which owns 840 N. Michigan, did not respond to a request for comment.

The North Michigan Avenue retail market is struggling and the condo market is soft, while the downtown hotel market recovering Magmile is a popular tourist destination. A joint venture involving Chicago developer Michael Reschke recently 388 room hotel 150 Ontario Street, just east of Michigan Avenue.

On the other hand, the apartment market in the city center booming. Mag Mile is a strong residence, said Ron DeVries, senior managing director of the Chicago office of appraisal and consulting firm Integra Realty Resources.

“Everyone knows where Michigan Avenue is, so the address has a reputation,” he says. “The boulevard is a very wide street, so you have plenty of space to take in the scenery.”

But Chicago developer Jim Letchinger isn’t sure. He believes that living on his North Michigan Avenue has lost some of its appeal as the West Loop and other places have emerged as residential areas.

“People who are 25 or 30 don’t want to be there,” he says. “I think it will be a tough fight.”

It’s also unclear whether the developer will be able to obtain zoning from the city to build a skyscraper on the Michigan Avenue site. To limit traffic congestion on the main street, the tower will need to have an entrance on a side street, developers say. And the big project wouldn’t go forward without the blessings of local Aldo. Brendan Riley, 42nd. He never returned the call.

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