MetLife Plans Redevelopment of Chicago's Water Tower Place

MetLife is doubling down on its accidental Magnificent Mile trophy.

The life insurance giant’s real estate investment arm is putting $170 million into repositioning Chicago’s famous Water Tower Place at 835 North Michigan Avenue, four years after seizing it through a deed in lieu of foreclosure, while there was more than $300 million of debt against the property.

With MetLife raising its bet on Water Tower Place and a surge of major tenant commitments up and down the corridor, the Mag Mile is trading its distressed narrative for a retail renaissance, Crain’s reported, citing an interview with David Stone of Stone Real Estate. MetLife retained Stone to lead the property’s retail leasing.

New York-based MetLife took control of the iconic vertical mall in 2022 after its previous owner, an affiliate of Toronto-based Brookfield Corporation, surrendered the distressed property to its lender rather than face a messy foreclosure. Brookfield had lost major tenants during the pandemic, including a Foodlife food hall on its mezzanine level and a 324,000-square-foot Macy’s department store.

Now, MetLife is opening its checkbook to drag the aging retail fortress into its next era.

The overhaul isn’t strictly a traditional retail play. As part of its strategy to stabilize the massive property, MetLife is continuing to explore a major conversion of the mall’s upper floors into medical office space.

The lender-turned-landlord has been mulling the healthcare space pivot since 2023, seeking to capitalize on robust healthcare real estate demand to fill the gaping voids left by departing big-box retailers. The property’s retail is 70 percent leased today, not counting the large Macy’s space, according to the publication.

MetLife’s massive capital injection coincides with a palpable, long-awaited rebound for the broader Magnificent Mile, which is finally shedding its pandemic-era blues. A recent flurry of blockbuster dealmaking is breathing new life into the city’s premier shopping corridor, even as its retail vacancy sat at 28 percent at the end of last year, according to Kirsch Agency. That was down from a peak of 34 percent in the wake of the pandemic.

Earlier this month, Farpoint Development and Saxony Capital scored a massive retail lease to anchor their turnaround bet at 830 North Michigan Avenue. The apparel sector is also reshuffling the deck to right-size its presence, as American Eagle recently inked a deal for a 14,000-square-foot flagship store, while Levi’s is relocating to a fresh 9,000-square-foot space at 663 North Michigan.

Nike is also maneuvering for a high-profile move of its own, considering a relocation from its long-standing flagship further down the avenue.

Adding to the momentum, Gap is reportedly eyeing a Magnificent Mile comeback at 700 North Michigan, after the retailers shuttered a store at 555 North Michigan in 2021, underscoring a renewed appetite among national retailers for prime Chicago frontage.