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

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

Turning both malls around takes time and money. Adding to the challenge is their verticality: While it makes sense to have multiple floors of retail space in a city where land is scarce and expensive, persuading shoppers to ride up multiple escalators to to find a store. It’s only gotten harder with the rise of online shopping, making shoppers appreciate convenience even more.

Brokers say North Michigan Avenue suffers from an abundance of vertical retail space, predicting that the owners of North Bridge and Water Tower will repurpose some of their top-floor space for other uses, including entertainment.

JMB does not have to think about that for the time being. The company spent $52 million in 2018 on a major renovation at 900 North that is now paying a dividend.

Figures from Placer.ai, an analytics firm that tracks pedestrian traffic in the mall using location data from mobile devices, confirm that the mall has outperformed North Bridge or Water Tower. During the first seven months of the year, foot traffic on 900 North fell 17.4% compared to 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 today’s market. Luxury retailers have performed well over the past two years, while many mid-market stores have struggled. For example, chains such as Banana Republic, Riley Rose and Abercrombie & Fitch closed stores at Water Tower. According to Cushman & Wakefield, the mall is only 46% occupied today.

Many luxury renters, including Cartier and Chanel, meanwhile, have left the Mag Mile for Oak Street, which has been thriving in recent years. Just steps from Oak Street is another plus for 900 North, close enough to attract high-end shoppers who seem impervious to inflation and recession fears. Upscale retailers love the location because they can rent space at a lower cost than they would pay for retail space on Oak Street or Rush Street, said broker Luke Molloy, senior vice president of CBRE’s Chicago office.

“It’s a much 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 determines how much rent a tenant can afford. Excluding Bloomingdale’s, retailers at 900 North achieved sales of $890 per square foot, up from $820 in 2020, according to broker Greg Kirsch, executive director of Cushman & Wakefield’s Chicago office. Water Tower’s sales per square foot were $609 before the pandemic, he said.

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

The move “has been huge,” Meara says, increasing traffic at the mall and allowing JMB to lease space nearby to complementary homeware tenants, such as Scandia Down. “You get a lot more cross-shopping.”

JMB has also made a conscious effort to attract tenants who target 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 major reason Janet Mandell, a boutique that rents out luxury clothing brands, rented a 7,100-square-foot space on the mall’s 6th floor that will open this fall.

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

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

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