Washington Capital Pays $41 Million for Chicago Retail

After years of distress and a lender takeover, a retail condo sold for $41 million on North Michigan Avenue, offering a rare signal of life on Chicago’s flagship shopping strip.

Seattle-based Washington Capital Management acquired the 21,565-square-foot, two-level retail condo at the base of 500 North Michigan Avenue, according to property records and brokerage Newmark. The seller, Commonwealth Development Partners, bought the entire 24-story building last year for just $5.1 million, and is converting the office portion into 320 apartments.

Crain’s reported that the retail deal equates to roughly $1,900 per square foot — a pricing level that stands out in a corridor where recent trades have largely been driven by distress. The property was encumbered by a $76 million loan from Granite Point Mortgage Trust, which had taken over the building before Commonwealth’s purchase, and said it expected to take a roughly $30 million loss on the disposition.

Since the pandemic, many high-profile Mag Mile properties have either slipped back to lenders or traded at steep discounts, reflecting weak foot traffic, retailer pullbacks and broader uncertainty about downtown recovery, according to the publication.

Newmark broker Keely Polczynski told the outlet that a notable recent uptick exists in leasing activity along the corridor, including one of the largest retail leases signed on North Michigan Avenue in roughly a decade. The momentum, paired with stabilized tenancy, appears to be restoring some confidence in the strip’s long-term viability, according to Polczynski.

The space itself is fully leased, anchored by tenants including Vans, Chick-fil-A and Bank of America, though part of the retail area is already being marketed for lease. The prior ownership group had invested roughly $20 million into renovations, including a prominent new facade wrapping the building’s lower floors.

Former ownership involved an international group of investors, including Israeli diamond magnate Beny Steinmetz, who was under investigation for bribery during his involvement with the building before Granite Point took control, as previously reported by The Real Deal.

— Eric Weilbacher