A Chicago real estate firm that frequently invests in Gold Coast retail properties is branching out with a deal to buy a high-profile property nearby on North Michigan Avenue, one of the nation’s best-known retail boulevards.
L3 Capital has a contract to buy a Louis Vuitton store and other retail space at the base of the historic Palmolive Building at 919 N. Michigan Ave., according to people familiar with the situation. The sale price could not be determined.
Formerly known as the Playboy Building, Hugh Hefner ran his famed magazine from the tower for about 25 years starting in 1965. The tower also has ties to President Herbert Hoover and Charles Lindbergh.
If it is completed as expected, the deal will give L3 Capital a foothold on a U.S. high street as the area often referred to as the Magnificent Mile makes a comeback from historically low demand.
It also would end a long-running plan by Chicago’s Nuveen, the investment management arm of TIAA, to sell the 51,795-square-foot retail property at the northern end of the avenue.
The pending deal is an extension of L3 Capital’s lengthy history investing on streets such as Rush and Oak in the nearby Gold Coast.
Many projects
Recent projects include the redevelopment of the longtime Carmine’s Bar & Lounge building at 1043 N. Rush St. and buying a property at 1000 N. Rush to convert it from a Wintrust Bank branch to a store for Kim Kardashian’s shapewear brand Skims. The Skims property went on the market for sale in April.
Nuveen has owned the property at 919 Michigan Ave. since paying nearly $90 million for it in 2012.
It has been on the market for sale multiple times in recent years without changing hands. One luxury tenant in the space, David Yurman, is set to move to Rush Street, Crain’s Chicago Business reported early this year.
Property valuations and leasing rates on North Michigan Avenue were beaten down in recent years by large store closures and historically high availability.
But L3 Capital could benefit from a wave of recent deals on the street, with new or soon-to-open tenants including a Harry Potter-themed store, the return of Uniqlo, a first-of-its-kind attraction called the Candy Hall of Fame Experience and a large American Eagle Outfitters space featuring three of its store brands. Levi’s is moving to a larger space, while Nike is in talks to reimagine its longtime flagship in a move down the street to a smaller space.
Nationwide investor
The owner of the Water Tower Place vertical mall recently unveiled plans for a $170 million makeover, while Marriott is in talks to open a 350-room Edition hotel within the 100-story former John Hancock Center at 875 N. Michigan.
Nuveen declined to comment on the deal. L3 Capital did not respond to requests for comment from CoStar News.
L3 Capital also is an investor in other Chicago neighborhoods, such as Lakeview and Fulton Market, and in other cities including New York, San Francisco, Boston and Miami.
Late last year, the firm sold a loft office and retail building in Fulton Market to Switzerland’s Zurich for just over $18 million. Earlier this year, L3 Capital paid just over $50 million for a grocery-anchored property in Lakeview that previously was owned by Site Centers.
Retail at 919 N. Michigan is at the base of the 37-story Palmolive Building, below separately owned luxury residential condominiums. The residential portion of the building has an entrance on Walton Street.
Beacon in the night
The art deco tower, completed in 1929, was designated a Chicago landmark in 2000. The property previously was known as the Playboy Building when the magazine’s editorial and business offices were based there.
During that time, the name "Playboy" was spelled out on both sides of the building in 9-foot illuminated letters.
Far above Mag Mile shoppers, one of the property’s distinguishing features is a light originally designed as a navigational beacon for pilots before advances in radio and radar equipment. It was donated to the city by Elmer Sperry, inventor of the gyroscope.
Originally named for Lindbergh after his New York-to-Paris flight in 1927, the rotating light was first illuminated in 1930 by Hoover. He pushed a button from the White House.
The beacon was temporarily turned off during World War II. No longer needed by pilots, the beacon shut down in the 1980s before being restored in 2007.