Two East Coast firms known for investing in distressed shopping malls bought a mostly vacant retail property on one of the country’s top retail corridors, Chicago’s Magnificent Mile, where owners are trying to bounce back from historically high availability.
Namdar Realty Group and Mason Asset Management, based in Great Neck, New York, have bought the 22,900-square-foot retail space at the base of the Warwick Allerton Hotel Chicago, where luxury watch seller Rolex is the lone tenant, according to brokerage JLL and the buyer.
JLL represented the seller, London-based Grosvenor, which had owned the space at 701 N. Michigan Ave. since paying $17.25 million in 2002. The sale price was not disclosed in the statement, and it could not yet be found in online Cook County property records.
The property went on the market for sale last September, and investors were considering the deal as overall availability on the 1-mile section of North Michigan Avenue known as the Mag Mile rose to as much as much as one-third of the space.
But there have been signs that some investors are willing to make high-priced bets that demand has bottomed out, including a recently completed $40 million purchase of a vacant, standalone retail building at 830 N. Michigan Ave. by local firms Farpoint Development and Saxony Capital.
The 701 N. Michigan offering was for only the retail portion of the hotel that is owned by Warwick Hotels & Resorts.
The only retail tenant is Rolex, which occupies 2,240 square feet of ground-floor retail shop space and 2,040 square feet of basement storage, according to JLL.
Long-term tenants Brooks Brothers and Stuart Weitzman left the entire building earlier in COVID-19, according to JLL, and Rolex filled some of that space with its deal.
“This was a heavily sought-after offering, given the opportunistic nature of the deal at a key corner along an internationally renowned high street,” Keely Polczynski, one of the JLL brokers who represented the seller, said in the statement. “There is a growing sentiment that the window to buy assets like this is closing.”
Grosvenor did not immediately respond to a request for comment from CoStar News.
High street retail is not what Namdar is best known for in its 177-property, 58 million-square-foot retail portfolio. The firm also owns 134 multifamily and mixed-use properties and a smaller number of office and other properties throughout the country, according to that firm’s website.
Namdar and Mason frequently team up on deals, often for shopping malls and other retail properties in financial distress. Other such Namdar deals in Illinois have included the Louis Joliet Mall in Joliet and the Ford City Mall on the city’s Southwest Side.
Last year, Namdar and Mason also bought malls in Trumbull, Connecticut, and Bay Shore, New York, from Paris-based Unibail-Rodamco-Westfield.
"Chicago is a growing market for us, and 701 North Michigan Avenue represents an exciting opportunity to expand our portfolio in high-end urban retail," Mason Asset Management executive Elliot Nassim said in the statement. "We look forward to supporting Rolex's success with co-tenants that will further add to the dynamic mix of the block."
The Mag Mile deal comes after urban retail sales volume fell to $4.8 billion nationally last year, down 39% from the previous year, according to JLL.
Yet asking rents in prime retail corridors rose 3.3% last year, and a JLL report forecasts an increase in investment sales volume over the next 12 to 18 months because of strong consumer spending.
For the Record
The seller was represented by JLL brokers Keely Polczynski, Michael Nieder, John Dettlaff and Caity Tirakian.