A historic building on Chicago’s Magnificent Mile has changed hands in a $47 million deal, as the city’s iconic retail corridor evolves.
Local firm North American Real Estate has purchased the 68,000-square-foot retail and office building at 605 North Michigan Avenue for $47 million, or $691 per square foot — a 66 percent discount from its 2016 sale price of $140 million, or $2,058 per square foot, Costar reported.
Brookfield Properties, which acquired the four-story building through its 2018 buyout of General Growth Properties, sold it in response to those market pressures. Eastdil broker Michael Pagliari represented Brookfield in the transaction.
The sale, finalized last week, shows the buyer’s contrarian optimism for the Magnificent Mile, where plummeting demand and rising interest rates have driven down values for retail and office assets.
North American Real Estate sees the acquisition as a unique opportunity to attract tenants and revitalize the area, said Savas Er, a NARE principal who sees the property’s long-term potential.
“With new buyers entering the market at a lower cost, it will be easier to rejuvenate the avenue,” Er said.
The building, known for its Gothic columns and prominent location at the corner of Michigan Avenue and Ohio Street, houses tenants including Chase bank, Sephora, and the architecture firm KTGY. However, several vacancies remain on the upper floors following the recent departure of co-working firm Regus.
This transaction is part of a broader pattern of losses for Brookfield and its lender MetLife on the Magnificent Mile. Brookfield previously relinquished its investment in the Water Tower Place vertical mall, which is facing substantial vacancies, including the former Macy’s store.
Similarly, a vacant retail building at 830 North Michigan Avenue, previously owned by Brookfield and financed by MetLife, sold last year for just $40 million, far below its 2013 purchase price of $166 million.
— Andrew Terrell
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