Retail landlord Macerich has left Chicago’s Magnificent Mile.
Macerich sold its 50 percent stake in The Shops at North Bridge building for $21 million, a fraction of the $515 million that it and partner the Alaska Permanent Fund, paid in 2008, Crain’s reported. The deal was for the 670,000 square foot property at 520 North Michigan Avenue as well as its 50 percent stake in a Wabash Avenue building, bought by the Alaska fund.
The transaction could mean the North Bridge building’s owner is underwater on the $375 million mortgage. The sale price may represent only the price for the Wabash parcel, which doesn’t have debt, Crain’s reported. In that scenario, the Alaska fund would have paid nothing for North Bridge itself, as there may be no equity in it with its mortgage.
The partnership was still able to extract money from the property since its purchase, even as the Magnificent Mile was hit hard during the pandemic. The partners refinanced in 2016, using some of the money to repay a $189 million loan and keeping the difference, reflecting the mall’s increase in value from 2008.
Retailers have been vacating the Mag Mile, including Forever 21, which left 42,000 square feet along North Michigan Avenue before the pandemic. In some cases, landlords are struggling to replace them and building owners have tried to create smaller spaces for retailers. The North Michigan Avenue retail vacancy rate rose to 26 percent in 2021 from 5.3 percent in 2017, Crain’s reported, citing Cushman & Wakefield.
New retail tenants are still seeking mall space. Leap, a Chicago startup that provides brick-and-mortar space for e-commerce brands, helped fill first-floor stores recently left empty by Sephora, Lucky Brand and Alex and Ani. The stores, totaling about 8,400 square feet, have been leased to Frank & Oak, United by Blue and Good Life, a Leap spokesman told Crain’s.
North Bridge’s occupancy rate was 79.5 percent at the end of 2020, down from 86.3 percent in 2019, Crain’s reported, citing SEC filings.
With the sale, Macerich reduced its assets in the Chicago area to just one Rosemont property, the 537,000-square-foot Fashion Outlets of Chicago shopping center, the outlet reported.
“It definitely fits within their narrative of reducing urban locations,” Alexander Goldfarb, managing director and senior analyst at Piper Sandler in New York, told Crain’s.
[Crain’s] – Sam Lounsberry
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