An owner of an outdated three-story building in Chicago’s affluent Gold Coast wants to build a new, smaller property to attract tenants seeking long-term leases.
Chicago real estate investment firm JMB Realty submitted a proposal this week asking for Chicago Plan Commission’s approval to build a 4,4848-square-foot, two-story retail property at 939 North Rush Street, after tearing down its vacant three-story building at 939 North Rush Street.
Tenants seeking longer leases in the Gold Coast want to be in a new building that maximizes frontage that features a glass facade, said Peter Caruso, managing director at JLL. The older buildings aren’t conducive to tenants’ needs, he added.
“All these old buildings that had tenants paying $50 gross for square foot are now replacing it with tenants paying a net of $100 per square foot,” Caruso said. “A landlord could take a leap of faith with a credited tenant to do this [build new properties].”
JMB Realty and Brendan Reilly of the 42nd Ward didn’t respond to requests for comment on why the firm was downsizing.
Right around the corner from 939 North Rush Street, New York investment firm Jenel Management sold a 32,000-square-foot property, home to high-end designer brands Chanel and Van Cleef & Arpels, for $120 million in November, marking the highest sale price for a Chicago retail property since 2016.
While the area is known to be one of the most active markets in the city, stores along Gold Coast’s Magnificent Mile have struggled as the tourist-dependent area felt the effects of the pandemic. The vacancy rate for retail stores in the area rose to 26 percent last year from 15 percent in 2019, according to Cushman & Wakefield.
In January 2021, Gap closed its 3,700-square-foot Mag Mile location at Water Tower Place joining Macy’s exit of a 170,000-square-foot flagship store. Large retail closures in the area also included Forever 21 and Uniqlo.