The announcement that Disney will close its retail store along the Magnificent Mile at month’s end leaves Acadia Realty Trust’s prime corner at 717 N. Michigan Avenue vacant.
The real estate investment trust paid $104 million for the property in 2017 and will likely divide the four-story building for additional tenants, said COO Christopher Conlon. Other landlords have done the same along Mag Mile, as department stores and flagship centers have exited.
Conlon said Michigan Avenue will remain a “dominant shopping corridor for the entire Midwest and certainly for Chicago but not with conventional retail. Some of it will be converted to alternative uses” that are “quasi retail” or entertainment-type uses, he said.
That is already in the works, as entertainment concepts and experiential venues are considering potential sites there, Crain’s previously reported.
Meanwhile, Disney had been the sole tenant remaining at Acadia’s 62,000-square-foot retail space; Saks Men’s Store left its 36,000 square feet in 2014. Despite the property’s years of near-vacancy, Conlon said he anticipated announcing new tenants by the beginning of next year. He did not provide details.
As Disney exits its 7,000 square feet, it joins more than a dozen empty storefronts along the stretch. Three other Disney Stores in the Chicago area will also be closing, the company said.
The news of the Disney store demise came on the same day that Target said it would be adding over 100 Disney shops to its stores across the country. In March, Disney said it planned to shutter dozens of brick-and-mortar stores nationwide.
Despite the sour news, Conlon said Acadia was “very, very pleased with the current level of interest we’re seeing” from prospective tenants in the property. He added that “Michigan Avenue has its challenges but for real well-located real estate, those challenges are less. And we have that.” Its neighbors on the other three corners include Neiman Marcus, Tiffany and Saks Fifth Avenue.
But those challenges include a North Michigan Avenue vacancy rate that has climbed to 26 percent, Crain’s reported, citing Cushman & Wakefield. Recent closures include Forever 21, Tommy Bahama and Uniqlo, along with the Gap and Macy’s, which earlier this year announced they would shutter their locations at Brookfield’s Water Tower Place.
Conlon said Acadia acquired 717 N. Michigan with the intention of redeveloping it. That hasn’t happened yet and Disney had been renewing year-long leases as it reconsidered its store footprint.
“There are several corridors around the country where multi-level flagship retail is no longer, and those spaces may need to be reoriented,” he said, referring also to New York, Washington, D.C., and Boston. “We’re very open-minded to that all around the country.”