L3 Capital Lists Skims Flagship Store in Chicago Gold Coast

Tim Phair and Dominic Lanni aren’t waiting around to see the Kardashian effect’s final impact on Chicago’s Gold Coast retail scene.

Fresh off securing a flagship lease with Kim Kardashian’s shapewear giant Skims, Phair and Lanni’s Chicago-based investment firm L3 Capital has moved to put the prominent Gold Coast retail property at 1000 North Rush Street on the market. L3 tapped CBRE to sell the 6,500-square-foot building, opting to cash out on bump in value from the Skims lease rather than holding onto the property for long-term rental income, Crain’s reported.

CBRE’s Christian Williams, Daniel Kaplan, Michael Wilson, Luke Molloy and Danny Jacobson are marketing 1000 North Rush for sale.

The decision to sell underscores a strategy common among value-add investors like L3. The firm transformed a former 1960s bank building that had been occupied by Wintrust for 30 years, and had long miffed other Chicago developers who eyed a conversion into traditional retail.

L3 bought the property from Rosemont, Illinois-based Wintrust for just less than $22 million last year, and turned it into a high-visibility first Chicago store for Kardashian’s buzzy Los Angeles-based brand.

With the listing, L3 is testing whether it will be considered a trophy property ripe for institutional or ultra-high net worth buyers.

The listing comes as the Gold Coast experiences a dramatic shift in its tenant mix, moving away from ultra-exclusive brands toward high-velocity lifestyle and slightly more accessible luxury labels in some spaces.

The Skims deal is a cornerstone of this transition, according to some Chicago real estate insiders. While the brand carried a $5 billion valuation as of a November funding round, and a global following, its presence — with many items priced below $100 — represents a departure from the tier of Van Cleef & Arpels or Cartier that has historically been the bedrock of Oak and Rush streets. Instead, Skims appeals to a younger, digitally-native demographic, signaling dealmakers prioritized foot traffic and cultural relevance over traditional high-fashion pedigree.

This revival is manifesting across the neighborhood as lifestyle-oriented tenants take over large storefronts once held by legacy retailers. Just across Rush Street from the Skims site, high-end fitness gym Club Studio recently took 35,000 square feet of space at 1030 North State Street, helping developers 11 East Partners and Blackbird Investment Group secure a new $55 million loan against the property. Meanwhile, the former Barney’s New York building at 15 East Oak Street, across the street from Skims, is getting new life as the owners of the high-end Italian hit Adalina are taking over the top-floor space formerly occupied by famed eatery and hangout Fred’s to launch a new restaurant concept called Arla.

L3’s confidence to list such a property now is also buoyed by massive institutional bets nearby. New York-based MetLife this week announced it’ll spend $170 million repositioning the Water Tower Place vertical mall, a much-needed psychological lift to the northern end of the Magnificent Mile suggesting investors are comfortable making large-scale plays on Chicago retail again after years of pandemic-era skepticism.

However, the market still has its rough patches. Even as L3 prepares for a potential windfall, other nearby properties are struggling with legacy debt. LNR Partners recently hit developer Marc Reinisch with a $10 million foreclosure lawsuit regarding a Gold Coast retail property at 100 East Walton Street, serving as a reminder that while new leases are driving headlines, the financial fallout of the last few years hasn’t been entirely cleared from the books.

— Sam Lounsberry