A Chicago investor has bought the retail portion of one of Chicago’s best-known buildings, the century-old Tribune Tower, betting on a continued recovery of the Magnificent Mile shopping corridor.
North American Real Estate on Thursday completed the purchase of the 47,000-square-foot block of retail on the ground floor of the 36-story tower at 435 N. Michigan Ave., principal Savas Er told CoStar News.
He declined to confirm a sale price, which could not yet be found in online public records on Friday.
“This is a very prominent building in the city and we’re extremely excited,” Er said. “The Michigan Avenue foot traffic is coming back. It’s become way more active. We are seeing more and more tenants coming back to Michigan Avenue.”
The real estate was for sale as a retail-only property for the first time since the neo-Gothic tower was completed in 1925 as home to the Chicago Tribune newspaper.
Eastdil Secured brokers began marketing the property for sale early this year on behalf of Los Angeles-based CIM Group and Chicago’s Golub & Co. They bought Tribune Tower for $240 million in 2016 to convert most of the tower into residential condominiums. Separately owned condos are not part of the property bought by NARE.
The city’s largest daily newspaper moved out in 2018.
The retail portion of the tower is just 36% leased, according to Eastdil. Tenants include the Museum of Ice Cream interactive experience, a Blue Bottle coffee shop and an A. Lange & Sohne luxury watch shop.
The retail property has 218 feet of Michigan Avenue frontage, according to Eastdil. Much of the space faces Pioneer Court along the south side of the tower. The public plaza also includes a separately owned Apple flagship store along the Chicago River.
Er said he envisions signing smaller tenants such as food and beverage providers along the pedestrian plaza and larger tenants along Michigan Avenue.
“The foot traffic on Pioneer Court, with Apple and the Museum of Ice Cream, is desirable to tenants,” Er said. “We believe the Pioneer Court spaces are unique and desirable. There are not many small-shop spaces available on Michigan Avenue. We purchased at a good basis, so we have an advantage in filling the vacancies.”
Golub and CIM Group declined to comment.
Unique history
Er’s firm has sought out discounted retail properties in several neighborhoods of Chicago in recent years. Other acquisitions have included an office and retail property at 110 to 112 S. State St. and the Flat Iron Arts Building in Wicker Park.
Most recently, the firm bought the fully leased Point at Clark shopping center at 3131 N. Clark St. in Lakeview.
Er said he was drawn to the Tribune Tower deal by the building’s history and international standing. On a vacation to Tokyo in April, as his firm was considering buying the property, Er said he spotted a sign promoting Chicago tourism, featuring a large photo of Tribune Tower.
“I thought, this is a sign,” Er said.
To mark the newspaper’s 75th anniversary, owner Robert McCormick in the early 1920s held an international design contest to create “the most beautiful office building in the world.”
The winning proposal by John Howells and Raymond Hood, featuring a limestone exterior and flying buttresses, topped a design by Finnish architect Eliel Saarinen.
The tower’s façade includes fragments of famous properties throughout the world, including the Parthenon, the Great Wall of China, the Taj Mahal, the Berlin Wall, the Great Pyramid at Giza and the Colosseum. There also are items for Chicago and all 50 states.
Magnificent Mile
NARE already is familiar with the Magnificent Mile, having paid $47 million last year for a four-story office and retail building a short walk north of Tribune Tower at 605 N. Michigan Ave.
That was a massive discount to the $140 million that it previously sold for in late 2016, reflecting historically high vacancy on the avenue.
In another sign of the avenue’s struggles, the owner of Chicago’s Water Tower Place is looking to sell the top five floors for alternative uses, with plans to shrink the vertical mall and its soaring atrium down to just three levels.
Yet recent signs of a retail recovery on North Michigan Avenue include the opening of a big Harry Potter-themed store and a large lease by Spanish clothing retailer Mango.
For the record
The sellers are represented by Eastdil Secured brokers Michael Pagliari, David Caprile and Sam Byczek.