Two local developers have a $40 million deal to buy a vacant retail property on Chicago’s Magnificent Mile, a massive discount from the last time it sold, as tenants exit one of the country's best-known retail districts with rising interest rates and other headwinds driving down values.
Northfield, Illinois-based Saxony Capital and Chicago-based Farpoint Development have a contract to buy the 117,400-square-foot building at 830 N. Michigan Ave. for just over $40 million, according to people familiar with the deal.
It’s the latest example of falling real estate values nationally. Despite its national profile, the Mag Mile is no exception as owners wrestle to fill large holes left behind by the likes of Macy’s, Gap and Banana Republic.
In recent years, luxury retailers including Cartier, Chanel, Bottega Veneta and Van Cleef & Arpels have signed deals to move off Michigan Avenue to nearby Oak Street, further straining the Mag Mile.
The six-level building at 830 N. Michigan last sold for $166 million in 2013. Current owner Brookfield Properties acquired the property as part of its takeover of GGP in 2018.
The building in recent years lost Topshop, Columbia Sportswear and most recently Uniqlo, leaving one of the largest vacancies on the avenue.
Brookfield put the property on the market for sale just over a year ago.
Brookfield still owes about $73 million on a loan from MetLife Investment Management, according to Crain’s Chicago Business, which first reported the deal by Farpoint and Saxony to buy the building.
That means both the lender and property owner are taking a big hit in the sale if the deal is completed as expected.
Founding principals of the firms buying the building, Saxony’s Joshua Mintzer and Farpoint’s Scott Goodman, declined to comment to CoStar News.
MetLife and Brookfield also declined to comment.
Brookfield, which is part of Toronto-based giant Brookfield Asset Management, last year walked away from its investment in Water Tower Place, the huge vertical mall nearby.
The lender on that property also was MetLife, which is now mulling options to fill a huge former Macy’s space and other vacancies. MetLife is considering switching upper floors of the mall to new uses, such as medical offices, CoStar News reported earlier this year.
In another high-profile surrender, mall giant Macerich last year sold its 50% stake in the Shops at North Bridge mall to its longtime investment partner, Alaska Permanent Fund, for a fraction of its previous sale price.
It’s unclear what Saxony and Farpoint plan for 830 N. Michigan.
After Michigan Avenue’s struggles in recent years, there are recent signs of activity, including upcoming openings of a huge Aritzia women’s clothing store in the former Gap flagship space, an Alo Yoga shop in former Disney Store space, and the Evie Grill in the former Bandera restaurant space.
Saxony is an investor in retail, residential and mixed-use properties.
Farpoint earlier this year began site work on the planned $8 billion mixed-use redevelopment of the former Michael Reese Hospital site south of the Loop business district.
The firm’s other projects include plans to build a new Chicago Transit Authority operations center in Garfield Park, with plans to then replace the current facility in Fulton Market with multiple high-rises.
Goodman is the co-founder of Chicago developer Sterling Bay, the firm he left in 2016 before launching Farpoint.
Property sales are relatively rare on the Mag Mile, and most of those that have sold in recent years have largely been well leased, including a Neiman Marcus store that a Texas investor bought for $94 million last year.
For the Record
The seller is represented by Eastdil Secured brokers Stephen Livaditis, Michael Pagliari and Jilly Cronin.