When the Signature Room abruptly closed near the top of the 100-story skyscraper in Chicago formerly known as John Hancock Center early this fall, it created what some restaurateurs view as the opportunity of a lifetime. Others see only a high-altitude headache.
The first opportunity in 30 years to take over the restaurant and bar space on the 95th and 96th floors is arriving during a tricky economy, record-high retail vacancy in the Magnificent Mile shopping district on the street far below, and the need for a multimillion-dollar refresh of the dated decor.
Offsetting those risks for any operator buying or leasing the space will be some of the highest and most breathtaking views of any North American restaurant, with the potential to sell tens of millions of dollars of food and drink annually.
But those are the stakes that come with the high-cost venue and the operational challenges that come with running the two-level, 26,168-square-foot space overlooking Lake Michigan, real estate and hospitality industry professionals say. There’s also the matter of changing national consumer tastes — that fine dining atop a skyscraper may not be the attraction it used to be, further elevating the risk for any business moving in.
“The universe of prospects to take over a restaurant like that is not large,” said Chicago retail broker David Stone of Stone Real Estate.
“The very best operators are so busy and have so many opportunities being put in front of them all around the country, where the landlord is willing to build the entire restaurant for them, that this would be viewed as a risk,” Stone told CoStar News. “The better operators have more opportunities for certain success. This is a much more difficult venture.”
How long it takes to fill the space and what type of concept takes it over is expected to be closely watched as a sign of whether the idea of dining with a view remains relevant as dining habits evolve.
End of an Era
Rick Roman and Nick Pyknis had owned and operated the restaurant on the 95th floor and the Signature Lounge cocktail bar on the 96th floor since 1993, and there were few outward signs that it was about to close until a note was sent to employees and a sign was hung at the property in late September.
When it closed, the owners of the space, New York-based Madison Capital and New Jersey-based PGIM Real Estate, were in the process of trying to sell the restaurant space in the tower to another real estate investor, with their brokers citing a long-term lease with the Signature Room as a selling point.
But in their note to employees, the restaurant owners mentioned that they had tried unsuccessfully to reduce their rent payments, leaving them with no choice but to close. Roman and Pyknis did not respond to requests for comment from CoStar News, and they have not publicly commented on the closing.
The Signature Room’s closing added to the retail vacancy rate on North Michigan Ave., increasing it to an all-time high of 33%, according to Cushman & Wakefield.
It also marked the end of an era for one of the Mag Mile’s best-known tourist destinations, within the city’s fifth-tallest skyscraper.
Completed in 1973, the building was known as the John Hancock Center until 2018, after the namesake insurance company stopped paying for naming rights. The property is now known by its 875 N. Michigan Ave. address.
The 1,128-foot-tall tower includes other retail space also owned by Madison Capital and PGIM. There are separate owners of the tower's observatory, offices, parking, privately owned condos, and broadcast antennas.
In the decades since the Signature Room opened, many of the world’s tallest places to eat have opened outside North America, in Asia and the Middle East cities where most of the world’s supertall towers have been constructed during that time.
The Guinness Book of World Records last year recognized the 1,825-foot-high Heavenly Jin within China’s Shanghai Tower as the world’s highest restaurant, pushing aside the 1,448-foot-high At.mosphere in Dubai. That restaurant is in the world’s tallest skyscraper, the Burj Khalifa.
For Sale or Rent
While the Signature Room remained open, the property’s owners had received interest from buyers including some restaurant groups that wanted to eventually take over the space themselves. The prospective buyers liked the idea of having a rent-paying tenant in place in the short term, but they were deterred by a lease that was set to run through 2031, according to Michael Marks, one of the Cushman & Wakefield brokers marketing the space for sale.
“The length of the lease presented challenges around timing before the space could be recaptured and reimagined,” Marks said. “It is one-of-one in Chicago and one of a handful of spaces in the country with remarkable views of a world-class city. There was and would be no shortage of interest at the appropriate pricing/rental rates reflecting today's environment."
Marks said he will continue to field offers from buyers, while a team of JLL brokers simultaneously markets the space for rent.
JLL’s Steven Schwartz said there are no potential leases in hand, but there has been strong interest in following a business that was on track to do $20 million in sales this year, “right up there with the top performers.”
“We've been speaking with big restaurant groups, and they're very interested in looking more closely at this,” Schwartz said. “And we haven't even gone outside of Chicago yet. We're just kind of curating a list right now to go to out-of-state folks and I suspect there's going to be a lot of interest from those as well.”
People familiar with the space say a new operator will need to make major upgrades to the space, which Schwartz describes as “somewhat tired.”
"The look and feel of it was very 1990s,” Schwartz said. “I think some of the partners had sort of reached their trajectory in the business world and decided that to keep pushing forward and plowing the capital into the business was not something they wanted to do at this stage of their career."
A new operator will need to be savvy and patient, Stone said.
“This is an unusual duck,” he said. Because of its elevation, “deliveries are hard. Everything is harder and more expensive and probably more frustrating. I’m sure it’s a very challenging restaurant to operate.”
Restaurant Struggles
Several people familiar with the Signature Room attribute the closing more to the rent dispute and rising costs in the restaurant industry than underlying challenges on the Mag Mile.
David Henkes, a senior principal and head of strategic partnerships at food industry consultancy Technomic, said the Signature Room shut its doors amid several major challenges including soaring costs for food and labor.
“It seems like it’s just another victim of the circumstances facing restaurants right now, which are pretty tough,” Henkes said. “I think it’s harder to run a restaurant now than any time in the past 40 years.”
Consumers are being more selective about where they spend their food and entertainment dollars, he said, which does present opportunities for a future operator of the space.
“Coming out of COVID, people are valuing experiences again,” Henkes said. “If you offer something unique, people have shown that they’re willing to pay for that.”
The ripple effect of the pandemic affects skyscraper restaurants on several levels, Hudson Riehle, senior vice president of research for the National Restaurant Association, told CoStar News.
"Rooftop dining certainly has been a hallmark of the American restaurant industry," he said. "It certainly has been an important component of restaurants in city center areas. And it certainly will continue to be over the decade ahead. It's just that from the industry perspective, as the recovery from the pandemic continues it has fundamentally altered not only a host of restaurant changes operationally, but also there is an allied change in societal aspects as well."
First, there's been a fundamental shift to more off-premises dining, according to Riehle. Next, tourism and business travel dropped and is slowly recovering, and they are the bread-and-butter in terms of patrons for high-ticket skyscraper destination eateries. In addition, hybrid work arrangements have resulted in fewer people being in downtown city centers, where upper-floor restaurants are most likely to be located, Riehle said.
Is Height Out of Favor?
When the Signature Room closed, some in the industry wondered whether such attractions have lost some of their appeal in North America even as they’ve risen to new heights in Asia and the Middle East.
In its final three full months in operation, total visits to the tower housing Chicago’s highest restaurant increased 11.9%, 8.6% and 13.1% when compared with the same month a year earlier, according to traffic analytics firm Placer.ai. By comparison, towers housing two similar spaces in New York — Peak on the 101st floor of 30 Hudson Yards and One Dine on the 100th floor of One World Trade Center — saw visits decrease in each of those same months.
Foot traffic counts can be deceptive, though, for spaces where many guests only have a drink to enjoy the view, restaurant professionals say.
In Chicago, the Signature Room followed other closings in recent years by Everest on the 40th floor of the office tower at 425 S. Financial Place, Cité on the 70th floor of Lake Point Tower near Navy Pier, and the Mid-America private dining club on the 80th floor of the Aon Center.
Businessman Jiazhao “Frank” Chen bought the Cité space out of a bankruptcy auction in late 2022, but he has yet to disclose specific plans for the space. He did not respond to requests to comment.
Last December, his broker told Crain’s Chicago Business that Chen planned a fine dining restaurant in the space under a different name.
Other North American dining perches include 306 Restaurant in Toronto’s CN Tower and Top of the World Restaurant in Las Vegas’ Stratosphere Tower.
New players in the niche will have to overcome different challenges than those faced by more earthbound eateries, said Phil Colicchio, an executive managing director in Cushman & Wakefield’s specialty food and beverage, entertainment and hospitality group.
“First of all, you don’t get foot traffic in this scenario,” he said. “So consequently, those sky-top restaurants become one of two things. They become special occasion restaurants, which is a hard way to make a living as a restaurateur, or — and this is more recent — they become event-centric restaurants. And by that I mean private events, anything from the birthday party to the special-event dinner when there’s a conference in town, or where you can buy the restaurant out to weddings.”
Rooftop Rivals Rob Wow Factor
The proliferation of rooftop bars has also stolen some of the thunder of skyscraper restaurants, making them less unique and special, according to Colicchio. There’s less of a perceived “wow factor” for skyscraper experiences, he said.
Generational tastes also are weighing on dining with a view, said restaurant consultant Darren Tristano, founder and CEO of Foodservice Results.
Skyscraper restaurants are less appealing to millennials and members of Generation Z, who might prefer the views from a less pricey rooftop bar, to grab a drink and a snack, according to Tristano.
"The Signature Room and these types of restaurants were more appealing to an older generation and the younger generation is probably not going to be thinking about going up for this type of a view," he said. "Kids today aren't going to places like that. I don't think the nostalgia is there for the younger generation, and therefore they're not clinging to why they should go to these restaurants, supporting them and keeping them open."
Tristano said he views the Signature Room's demise as a bellwether for sky-high eateries.
"My guess is these are declining over time as a whole," he said. "I mean, when you look at a restaurant that's been open over 30 years, an institution in the city of Chicago, it's evidence that this segment, this type of experience, just isn't what it used to be.”
The sector also faces challenges from so-called "eatertainment," which mixes food and drinks with activities such as bowling, miniature golf and more recently pickleball. That presents more competition for a pricey restaurant that has a great view, he said.
In Chicago, the competition also includes chef-driven restaurants in growing areas such as the Fulton Market district.
“Views are nice, but they’re maybe not as valued as they once were,” Stone said, before adding one caveat that could help the Signature Room space rise again:
“The view is magnificent, absolutely stunning, even if you live here.”