A pair of New York-based investors are hanging onto a Magnificent Mile property that they just refinanced in hopes that the recovery of the retail corridor will pick up speed.
Landlords Feil Organization and Nakash landed a $55 million loan for 645 North Michigan Avenue last month, Cook County records show. The pair previously secured a loan for the property for $65 million in late 2013. Feil’s firm controls 75 percent of the property while Spiegelman holds the remaining 25 percent, the previous mortgage showed.
While it’s unclear what drove the new loan to a lower amount than the previous debt, the refinancing serves as a vote of confidence in the ability of the Magnificent Mile to recover. It also illustrates the benefits of a diverse roster of tenants, considering the building’s mix of retail and medical office uses.
The 12-story, 200,000-square-foot building’s ground floor has been home to a pair of luxury retailers, Salvatore Ferregamo and Ermenegildo Zegna, since the late 1990s. And it is bolstered by leases with Northwestern University and medical offices on the upper levels.
The combination “is definitely a green shoot for the area,” said Mark Bâby, a leasing broker with Stream Realty who represents the landlord. The upper-floor leases have helped the building perform better than some of the surrounding buildings that are more retail-heavy, he said.
A lender who recently took back the keys to one of the Mag Mile’s most prominent retail assets is on the hunt for a developer that might replicate the approach. MetLife Insurance is marketing the top five floors of the Water Tower Place vertical shopping mall for sale, and playing up a new owner’s potential to convert them away from retail. It’s emphasizing medical offices as a possible fit.
An affiliate of Brookfield Properties surrendered Water Tower Place to MetLife with more than $300 million owed on a loan against the property.
Feil and Spiegelman did not return requests for comment.
As Mag Mile retail continues to struggle in the wake of the pandemic, landlords have been pursuing different strategies to bounce back. Some are counting on the rebound of tourism and other foot traffic, some have sold at a loss while others are considering redeveloping sites into different uses such as residential or entertainment.
In the fall, Farpoint Development and Saxony Capital snapped up a vacant 17,400-square-foot building at 830 North Michigan for $40 million that was previously anchored by Japanese retailer Uniqlo. It constituted a substantial loss for seller Brookfield Properties. At the time, the vacancy rate on the Mag Mile was hovering around 30 percent, which is double what it was pre-pandemic.