Michael Koss buys River North retail space for $16M

Real estate investor Michael Koss’ firm provided a $15 million exit to a Chicago landlord that overhauled and refilled a River North retail asset.

MAC Management sold a building at 678 North Wells Street, currently housing a CVS pharmacy and store, for $15.4 million, according to Cook County property records. Koss Real Estate, a Los Angeles-based firm headed by Koss, was the buyer.

While it’s unclear how long CVS’ 10,000-square-foot lease will last, MAC improved the building’s revenue stream by investing into improving the property after its purchase, and then luring more retailers. It snagged a construction permit in 2017 to renovate the building’s facade and other aspects after CVS agreed to lease its space, and the landlord brought in Japanese restaurant Cocoro and a laser hair removal service to occupy spaces within the 14,600-square-foot property, which appears to be fully leased.

MAC purchased the property for $9.5 million in 2016, meaning its asset rose in value by 62 percent with the sale. Koss paid about $1,054 per square foot. It’s unknown how much money MAC put into renovating the property, and neither the buyer nor seller could be reached for comment.

The deal is reminiscent of others across Chicago’s downtown area, which has experienced a mixed retail market amid the pandemic. Certain neighborhood assets, especially on high streets such as Damen Avenue through North Side areas including Bucktown and River North, have bounced back strongly from the pandemic, while more high-profile shopping districts including the Magnificent Mile and State Street through the Loop are struggling with high vacancy rates.

Goldman Sachs’ real estate investment arm, however, in August cashed in on a deal involving a similar tenant in a mixed-use building in Chicago’s Gold Coast. It recouped just about all of its $23 million purchase in 2015 of 1165 North Clark Street by selling the ground-floor retail portion of a Walgreens-leased property for $21.3 million while holding onto the rest of the eight-story property’s office space.

The 18,000-square-foot retail section, leased to CVS for 20 more years, sold for $21.3 million, or about $1,180 per square foot. The buyer was YFP, a limited liability company registered in South Carolina to Jeffrey S. Yager.