The Neiman Marcus building on Chicago’s Magnificent Mile was sold by UBS Realty Investors for an undisclosed price after six months on the market.
The buyer, Silvestri Investments, is betting on the revival of Chicago’s famed shopping district at a moment when it’s struggling with a series of pandemic-related challenges: a dropoff in foot traffic as office workers stay home and tourism declines; rising crime in the area; and vacant storefronts.
The 195,500-square-foot building at 737 N. Michigan Ave is the department store’s flagship location in Chicago. The company has leased there since it was built in 1983. The four-story building has the largest continuous storefront on Mag Mile at 200 feet.
“Neiman Marcus is one of only eight trades on Michigan Avenue within the last decade and was highly sought after by both domestic and international capital due to the rare flagship offering on one of the world’s most renowned and proven high-street corridors,” JLL broker Amy Sands said in a statement.
Both the seller and the buyer were represented by JLL, with Sands, Clinton Mitchell, Alex Sharrin and Michael Nieder representing the seller, while Christopher Knight represented the buyer. The real estate firm also arranged a seven-year acquisition loan for the buyer.
When the building was listed in October, the Cook County Assessor’s office valued the property at $46 million.
Perhaps the most important factor in the sale is the duration of Neiman Marcus’ lease, which was undisclosed. A longer lease will prove more lucrative, and increase what the property is worth to an investor.
It was the chain’s second most-profitable location and is expected to post $123 million in sales last year, according to JLL. Sales were up 5 percent in 2021 compared with the same period in 2019, Crain’s reported.
UBS bought the Neiman Marcus store and an attached office space in 1998 for $104 million. It wasn’t until 2020 that UBS split up the retail and office space. The offices weren’t part of the sale.
Retail on the Mag Mile has suffered during the pandemic. The vacancy rate climbed to 26 percent in 2021 from 15 percent from 2019, Crain’s reported, citing Cushman & Wakefield. Closures have included Forever 21, Uniqlo, Gap and Macy’s.
Shopping malls and hotels in Cook County were hit in 2020 as the pandemic battered the entertainment industry. They failed to pay nearly $500 million in property taxes last year, even after the county extended the deadline two months without penalty.