Then, in April, New York-based Brookfield Property Partners relinquished its ownership stake in Water Tower Place to its lender, MetLife, an acknowledgement that the mall was worth less than the debt owed on the property.
Turning around both malls will take time and money. Adding to the challenge is their verticality: Though having multiple floors of retail space makes sense in a city where land is scarce and expensive, persuading shoppers to ride up multiple escalators to find a store has always been a challenge. It’s only become tougher with rise of online shopping, which has made shoppers value convenience even more.
Brokers say North Michigan Avenue suffers from a glut of vertical mall space, predicting that the owners of North Bridge and Water Tower will repurpose some of their upper-floor space into other uses, including entertainment.
JMB doesn’t have to think about that for now. The firm spent $52 million on a major renovation at 900 North in 2018 that is paying dividends now.
Figures from Placer.ai, an analytics firm that tracks mall foot traffic using mobile-device location data, confirm that the mall has fared better than North Bridge or Water Tower. During the first seven months of the year, foot traffic at 900 North was down 17.4% compared with the same period in 2020. But it dropped 33.4% at North Bridge and 49.9% at Water Tower.
The 900 North Michigan mall caters to a wealthier clientele than the other Mag Mile malls, an advantage in the current market. Luxury retailers have prospered over the past two years or so, while many midmarket stores have struggled. Chains like Banana Republic, Riley Rose and Abercrombie & Fitch, for instance, closed stores at Water Tower. The mall is just 46% occupied today, according to Cushman & Wakefield.
Many luxury tenants, including Cartier and Chanel, meanwhile, have left the Mag Mile for Oak Street, which has thrived over the past couple of years. Being just a block from Oak Street is another plus for 900 North, close enough to attract high-end shoppers who seem impervious to inflation and recession fears. Luxury retailers like the location because they can rent space at a lower cost than they would pay for storefront space on Oak or Rush streets, says broker Luke Molloy, senior vice president in the Chicago office of CBRE.
“It’s a lot cheaper Gold Coast option—you have access to the same customers,” he says.
More luxury retailers mean higher sales per square foot, a key figure that factors into how much rent a tenant can afford. Excluding Bloomingdale’s, retailers at 900 North rang up sales of $890 per square foot, up from $820 in 2020, according to broker Greg Kirsch, executive managing director in the Chicago office of Cushman & Wakefield. Water Tower’s sales per square foot totaled $609 before the pandemic, he said.
Unlike Water Tower, which lost Macy’s in 2021, 900 North also has profited from having 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 “has been huge,” Meara says, boosting traffic at the mall and allowing JMB to lease nearby space to complementary home-goods tenants, like Scandia Down. “You get a lot more cross-shopping.”
JMB also has made a deliberate effort to attract tenants that 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 neighborhood focus was a big reason that Janet Mandell, a boutique that rents out luxury clothing brands, leased a 7,100-square-foot space on the mall’s 6th floor that will open this fall.
“It’s more community-based, whereas Water Tower and North Bridge are more touristy,” says owner Janet Mandell.
The mall also may attract the kind of wealthy, social clientele that she’s trying to reach: It costs anywhere from $500 to $1,000 to rent a dress and matching pair of shoes from her shop.