Chicago’s L3 Capital is working to sell an Oak Street retail property for top dollar after securing a 10-year lease from a high-end jeweler, Burdeen’s Jewelry.
Marketing materials from broker Mid-America Real Estate Corporation highlight the jeweler’s lease as a sign that the retail property will be a strong investment for would-be buyers. Although the asking price is not disclosed, a person familiar with the listing said it could fetch more than $25 million.
L3, co-founded by Domenic Lanni and Timothy Phair, purchased the property for $23 million in 2018 from a trust whose beneficiary was shielded from public records.
Northern Trust Bank previously leased the two-story, 10,000-square-foot building but closed the location in late 2020. L3 secured the lease with Burdeen almost exactly a year ago, and the listing shows the tenant is paying $1.5 million in rent annually with 2.75 percent increases each year. The lease nets out to about $140 per square foot.
Oak Street, an offshoot of North Michigan Avenue’s Magnificent Mile, has served as a model for a retail district that can withstand the post-pandemic slump plaguing other shopping destinations. Unlike the Mag Mile’s traditional department store-sized retail spaces, Oak Street businesses tend to occupy small, boutique-style properties.
Marketing materials for 118-120 Oak also point to similar leases recently struck in the area, such as Goyard’s $270 per square foot lease at 41 East Oak (although that deal has become the subject of a lawsuit), Lafayette 148’s $330 per square foot lease at 59 East Oak, and Chanel’s $444 per square foot deal at 65 East Oak.
The strip’s other tenants include Hermes, Harry Winston, and Prada. In 2021, Germany-based Union Investment Real Estate bought the Chanel-anchored building from New York-based Jenel at 57-65 East Oak for $120 million. The $4,165 per square foot for the property was Chicago’s third-priciest retail deal in history at the time of the transaction.
If L3 finds a buyer for 118-120 Oak, the firm could cash in on Oaks Street’s resilience. Brokers Joe Giardi and George Ghattas of Mid-America are handling the listing. Giardi, Ghattas and representatives of L3 did not respond to requests for comment.
Investors aren’t immune to missteps in the area, however. A retail space just off Oak Street at 1003 North Rush Street was sold last year by Atlanta-based Invesco for $12 million, down from its $14 million purchase price in 2014, to Stone Street Partners.
Still, unlike Chicago’s office market, which ticked up to a record-setting 23.8 percent in the last few months of 2023, the city’s retail sector has had a stronger post-pandemic rebound. But the comeback hasn’t been without its struggles. Oak Street has tended to outperform neighboring Michigan Avenue.
In the aftermath of the pandemic, Magnificent Mile lost Banana Republic, Gap, Macy’s, Uniqlo and Timberland, among other tenants. Some industry players are counting on Michigan Avenue to still have a comeback even if leasing activity progresses at a slower pace than on Oak.
In November, landlords Feil Organization and Nakash landed a $55 million loan for 645 North Michigan Avenue. Their refinancing was a vote on confidence in Magnificent Mile as well as the benefits of having a diverse grouping of tenants.
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.
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