In a late-night social media post, President Donald Trump described Chicago’s “Miracle Mile Shopping Center” as failing and “ready to call it quits” without military intervention.
The post on Trump’s Truth Social late Monday has led to some head-scratching in Chicago and among U.S. commercial real estate professionals, since no shopping center or area of the city is known as the Miracle Mile.
“The Miracle Mile Shopping Center in Chicago, once considered our Nation’s BEST, now has a more than 28% vacancy factor, and is ready to call it quits unless something is done about murder and crime, which is prevalent throughout the City,” Trump’s post stated. “CALL IN THE TROOPS, FAST, BEFORE IT IS TOO LATE!”
The post appears to have been meant to describe the Magnificent Mile, the stretch of North Michigan Avenue that long has been known as one of the nation’s top shopping avenues.
Some real estate professionals expressed puzzlement about the timing of the post, considering the president’s real estate firm, the Trump Organization, is actively courting prospective tenants for ground-floor retail space in the Trump International Hotel & Tower. That space has sat vacant since the skyscraper was completed just steps from the Mag Mile in 2009, but the Trump Organization in May hired Newmark brokers to actively seek out tenants.
The Mag Mile is not without its issues. Trump’s comments come after historically high vacancy on the avenue appears to have bottomed several months ago, with rising foot traffic and a series of high-profile new retail leases — including a Harry Potter-themed flagship that has been attracting large crowds since it opened in April — providing signs of a comeback.
In a statement, the Magnificent Mile Association said that vacancy on the street is now 22.9%, with “market rents trending upward for the first time in years.”
“New leases, store openings and reinvestment continue to bring renewed energy and momentum to the district,” the statement added.
Long-running feud
Trump has engaged in a long-running feud with politicians, including Illinois Governor JB Pritzker and Chicago Mayor Brandon Johnson, both of whom have loudly objected to Trump’s desire to deploy National Guard troops to Chicago.
A Trump Organization spokesperson didn't respond to a request from CoStar News to clarify the president’s social media post.
There are shopping centers or districts known as the Miracle Mile in faraway areas such as Las Vegas, Los Angeles and Miami, perhaps leading to Trump’s confusion over the Chicago street’s nickname.
The reference to 28% vacancy may have come from statistics from a Chicago-based retail brokerage, the Kirsch Agency, led by Greg Kirsch.
Kirsch Agency statistics combine vacant and available space on the avenue, showing that level now at 28.7%. That is far above the all-time low of 3.6% in 2016, but down from the peak of 33.9% during the first quarter of this year.
Kirsch projects it will fall to a normal, healthy level in the mid-teens by 2030.
“I don’t know what the Miracle Mile in Las Vegas is doing, but the Mag Mile in Chicago is an active, vibrant and recovering high street with multiple flagship tenancies in negotiation,” Kirsch told CoStar News.
“The statement that the Mag Mile is a disaster area is wrong,” Kirsch said. “It’s not true. All my clients are reporting the highest sales that they’ve ever done on the street.”
Lean years
Changing shopping habits, retailer bankruptcies and pullbacks, and worries about crime in Chicago led to big changes on the Mag Mile in recent years.
Smash-and-grab robberies of some businesses, such as one at a Louis Vuitton store that recently led to the death of a driver who wasn’t involved in the crime, show that many obstacles remain to a full Mag Mile recovery.
Major store closings in recent years have included Macy’s vacating the largest space on the avenue. The longtime department store took up parts of all eight levels of the Water Tower Place mall at the north end of the district.
Owners of the Water Tower Place and Shops at North Bridge vertical malls handed the properties back to their lenders as their vacancy rose and foot traffic in the area dwindled.
Water Tower Place’s former lender, and now owner, is Metropolitan Life Insurance. MetLife is now looking to sell or lease the upper five floors for a new use such as medical offices to reduce the mall to three levels.
But the removal of those hard-to-lease upper floors from the retail inventory, coupled with a string of new leases, has pushed down vacancy.
“The vacancy rate is still high, but in my opinion the avenue is very much in recovery,” said retail broker John Vance of Stone Real Estate. “Retailers want a good feel when they walk down a street. When you walk down the Mag Mile now, there are crowds and energy.
“It’s different. If you were a tenant rep two or three years ago and you were walking down the avenue, you were feeling pretty good. You were in control. Now it’s tighter. Now you know other tenants are looking, so retailers need to be willing to act quicker if they want to be on the avenue.”
New tenants
Along with the Harry Potter concept, big openings in recent years have included Alo Yoga taking over part of a former Disney Store space and women’s clothing seller Aritzia moving into an entire multilevel former Gap flagship store.
Other tenants that have recently signed leases include Spanish clothing brand Mango, Japan’s Uniqlo and multiple interactive gaming concepts. Paris-based Magnicity also bought the former Signature Room space on floors near the top of the 100-story John Hancock Center skyscraper with plans to expand the 360 Chicago observatory.
Just off the avenue, a $50 million project is underway to transform the former McCormick Mansion at 100 E. Ontario St. into an upscale magic venue called The Hand & The Eye.
As that deal shows, progress on the Mag Mile can positively affect nearby areas.
Acadia Realty Trust, a real estate investment trust based in Rye, New York, said that is the case with properties in the Gold Coast. The REIT is an investor in several areas of Chicago, including North Michigan Avenue and nearby Walton Street in the Gold Coast.
During a recent quarterly call with analysts, Acadia Senior Vice President of Leasing and Development A.J. Levine said sales by its Gold Coast tenants are up more than 40%, “driven largely by an accelerated recovery on North Michigan Avenue,” according to a transcript of the call.
It remains to be seen whether the unused Trump Tower space will benefit in a similar way. Real estate professionals have said that the polarizing Trump brand, along with shortcomings of the layout of the retail space such as no street frontage, could prove difficult to overcome.
One of the Newmark brokers marketing the space for lease, James Schutter, declined to comment on Trump’s recent comments about Chicago. But he said the leasing team has been busy providing tours to tenants such as restaurateurs seeking space overlooking the Chicago River, along with entertainment and service-oriented tenants.
Just across the river from Trump Tower, the retail portion of one of Chicago’s best-known buildings, Tribune Tower, recently changed hands. The new owner, Chicago-based North American Real Estate, which also owns a retail property a short walk north at 605 N. Michigan, earlier this year landed a deal with the North Face in a relocation on the street.
Principal Savas Er said his firm has seen a significant uptick in interest from tenants of late.
“A couple years ago, there were not many tenants looking at the Mag Mile,” Er said. “In the last 18 months, we’ve seen so many new tenants looking and trying to get into Chicago. They want to be on Michigan Avenue. We are right now actively talking to more than 10 tenants for our properties. That’s a huge number. Two years ago, it was maybe one or two.”