Brookfield Property Partners is handing over the keys to Water Tower Place, a Magnificent Mile mall, about a year after it lost Macy’s, its largest tenant.
Brookfield plans to relinquish the mall to its lender, MetLife Investment Management, a unit of New York insurer MetLife, according to Crain’s. Water Tower Place was the first indoor mall in Chicago when it opened in 1975 and is part of a development that included condominiums, office space and the Ritz-Carlton Chicago.
The decision underscores how challenging it’s been for landlords and retail tenants on the Chicago shopping strip to recover even as the pandemic wanes. A quarter of retail space on the Mag Mile is vacant, according to Crain’s.
Giving up the property means that Brookfield doesn’t think it’s worth spending the money required to restore the mall to pre-pandemic success. The mall has also lost so much equity that the firm’s investment is gone — it’s now worth less than the $300 million in debt owed on it.
“Water Tower Place will no longer be part of Brookfield’s portfolio,” the company said in a statement. “After many discussions to carefully assess and identify all available options to move forward, we’ve determined that it is best to focus Brookfield’s resources on other opportunities within our portfolio.”
A Brookfield spokeswoman declined to comment to Crain’s beyond the statement.
The nine-story, 818,000-square-foot mall at 845 N. Michigan Ave. lost other tenants besides Macy’s during the pandemic, including Banana Republic, Aritzia and Riley Rose. Initially, Brookfield planned a substantial makeover of the mall after Macy’s left, but the renovation never materialized.
MetLife may consider revitalizing the mall itself or selling it off. In a statement to Crain’s, MetLife declined to comment on the specifics of the transaction.
Retailers vacating the Mag Mile include Forever 21, which left 42,000 square feet along North Michigan Avenue before the pandemic. In some cases, landlords are struggling to replace them and building owners have tried to create smaller spaces for retailers. The North Michigan Avenue retail vacancy rate rose to 26 percent in 2021 from 5.3 percent in 2017, according to Cushman & Wakefield.
[Crain’s] — Miranda Davis