A Chicago investor purchased a four-story mixed-use building on the Magnificent Mile at a two-thirds discount from when the property last traded hands in 2016.
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North American Real Estate scooped up the 85K SF retail and office building at 605 N. Michigan Ave. for a reported $47M from Brookfield Properties, according to CoStar. Mall owner GGP, which Brookfield bought out in 2018, purchased the property in December 2016 for $140M.
The sale is another marker of the steep loss in value for properties along the famed shopping corridor in the wake of the pandemic. As of the first quarter, Mag Mile retail vacancy sat at about 27%, up from 11% prepandemic.
But NARE is betting on a comeback for one of the city's best-known retail streets.
“With new buyers coming into the market at a lower basis, it will be easier to revive the avenue,” Savas Er, a principal at the firm, told CoStar. “This is a Main and Main corner on Michigan Avenue. We believe in Michigan Avenue, and we believe in Chicago.”
NARE sees sizable price resets as a chance to earn long-term profits. Landlords with access to capital can aggressively pursue leasing opportunities, Er said.
Er told CoStar that the firm will make minor cosmetic improvements to the building and aims to fill existing and potential vacancies. The building houses a Chase branch, a Colores Mexicanos arts and food shop, a Sephora store and the office space for architecture firm KTGY, Er said.
Brookfield has taken a bath on the Mag Mile over the past few years.
The company turned over the keys to the Water Tower Place to its lender, MetLife, in 2022 after its equity in the mall was wiped out. At the end of 2023, Brookfield sold the 117K SF retail building at 830 N. Michigan Ave. for $40M, far less than the $166M GGP bought it for in 2013.
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