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Feature Article, May 2006
Chicago’s Magnificent Mile Posts Strong Occupancy
Only 137,442 square feet of available retail space remains.
Bruce Kaplan
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Bruce Kaplan in front of the Trump International Hotel & Tower, currently under construction in Chicago.
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Northern Realty Group has recently completed its annual vacancy survey of Chicago’s famed North Michigan Avenue, and the news is positive. According to the survey, it would appear that the continued retail strength of the “Magnificent Mile” is continuing. In addition to the positive news that North Michigan Avenue is essentially at full occupancy, Northern Realty’s latest retail survey discloses that ground-floor space can command rents of up to $350 per square foot — although no one is likely to find available space at ground level anytime soon. Leading upscale retailers, therefore, continue to snap up available, high-profile space in the Avenue’s other three vertical malls, all of them highly successful: 900 North Michigan, Water Tower Place and North Bridge.
The total retail inventory on North Michigan Avenue remained flat over the past 12 months, with a total of 3,274,771 square feet, including department stores (Lord & Taylor; Marshall Field’s, soon to be renamed Macy’s; Neiman Marcus; Saks Fifth Avenue; and Nordstrom), and there is little if any room for expansion. At the present time, only 137,442 square feet of retail space is available on the Magnificent Mile.
MICHIGAN AVENUE’S BOUNDARIES
The geographical area of Northern Realty Group’s survey extends from Chicago’s Oak Street/East Lake Shore Drive on the North to the Chicago River on the south. |
For decades, North Michigan Avenue has been acknowledged as one of the world’s premier shopping districts. The Avenue has the largest and most navigable concentration of high-end international and domestic retailers, and, despite rising rents, is still a phenomenal buy and a solid performer, with retailers posting historical highs in sales of $550 per square foot.
As the Northern Realty Group vacancy data is announced, it appears the continued retailing strength of the “Magnificent Mile” has thus far eluded two New York real estate groups developing projects in the area.
The legendary Donald Trump reportedly is scoring substantial success in the sale of condominiums at his much-publicized mixed-use development now under construction on the Chicago River. At this time, there’s been no news on any leases for the retail side of the project. The development has substantial blocks of retail on multiple levels of Trump International Hotel & Tower.
The Trump development as a whole enjoys enviable sight lines from downtown Chicago’s “Loop” immediately to the south, but access to the building by casual shoppers is confusing. Further complicating the issue, the venerable Wrigley Building at 400 North Michigan Avenue, which could create an impressive gateway for Magnificent Mile shoppers to the Trump project, so far has elected not to commence renovations. As a result, shoppers may well be required to solve some access issues to find Trump’s stores.
Meanwhile, halfway up the Magnificent Mile at 700 North Michigan, a high-profile New York investment group has an equally challenging leasing problem in the Saks Fifth Avenue-anchored Chicago Place.
The problems facing Chicago Place are emphatically underscored in Northern Realty Group’s just-completed survey of North Michigan Avenue retail space. The study reveals a very healthy 4.2 percent overall vacancy rate. But a remarkable 57 percent of the Magnificent Mile’s total vacancy is in Chicago Place. In fact, but for this one struggling vertical mall, the overall vacancy rate for the Avenue’s nearly 3.3 million square feet of retail space would be a mere 2.0 percent. Chicago Place was purchased in 2005 by a high-powered, private New York investment group.
Bruce Kaplan is president of Chicago-based Northern Realty Group, Ltd. specializes in leasing and consulting on retail developments and the retail components of mixed-use properties, the representation of retail tenants throughout North America, and the development of retail and mixed-use projects.
New York’s The Bowery Is The New Millionaires Row
The transformation of a street once synonymous with bleak failure is the new millionaire's row.
Andrew Pittel
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The retail portion of 312 Bowery has been restored to its original architecture, which consists of exposed brick, a large skylight, and 15-foot ceilings.
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Luxury apartment buildings are spurting up all over the The Bowery, a historically low-rise neighborhood in New York City. The area now boasts two nearly completed 16-story luxury residential buildings: 195 Bowery and Gwathmey Siegel's "Sculpture for Living," a glass tower of curvilinear stature ascending over Astor Place. The asking prices for units in these buildings range from almost $3 million to over $12 million. In between are several projects that are underway and some still on the drawing board; the almost completed mega residential and retail developments of Avalon Chrystie Place and its fraternal twin sister that sit directly across from each other on the northeast and southeast corners of Houston and Bowery Streets; The Phipps House’s Extra Place Apartments and retail almost completely sprouted at the northeast corner of Bowery and First Streets.
The transformation continues with 312 Bowery undergoing oodles of skeleton baring cosmetic surgery. A full gut rehab that is sure to trumpet spectacular beauty. It boasts a dramatic retail presence of more than 6,000 square feet. 351 Bowery is to be an extraordinary 15-story super luxury residential condominium building with approximately 11,000 square feet of highly visible dramatic retail. And in between it all to put the icing on the cake is 335 Bowery — the Richard Born and Ira Drukier (Maritime Hotel), and Eric Goode and Sean MacPherson (Bowery Bar) 16-story, 140-room boutique hotel which is currently under construction and scheduled to open before the end of the year.
The Bowery is an up and coming neighborhood. The retail rents that we are seeing landlords starting to enjoy are from $95 to $115 per square foot. If you are thinking the banks have arrived you are correct. Rumor has it that one of our friendly banks is negotiating for a corner location at $110 per square feet. By the time this goes to print perhaps it will already be a signed deal. As the saying goes “there goes the neighborhood.”
Cooper Union, the science and arts college, is located where the Bowery becomes Fourth Avenue. Ground breaking is scheduled for this summer to commence building a new academic building. The plans call for tearing down its 1950’s School of Engineering and rebuild it nearby and replace it with a 400,000-square-foot, 17-story office building with some community facilities. The entire Fourth Avenue block front where the engineering school now stands — bounded by 9th and 10th Streets, Third and Fourth Avenues — would be cleared.
At the intersection of the Bowery and Second Street, is a $30 million, 13-story dormitory with 174 studio apartments for lease by New York University.
The Bowery runs from Chatham Square north to Ninth Street. Gone are the days where the Bowery was strewn by bars, brothels, flophouses, vaudeville houses, gospel missions, pawn shops, day-labor agencies and the local eateries would advertise on sidewalk chalkboards.
The belief in the success of this urban rebirth is proven by the actions of supermarket giant Whole Foods taking up residence in the Avalon Chrystie Place development. Many top chefs, restaurateurs, and apparel boutiques have been poking around with a sincere interest. For the first time in the Bowery’s very colorful history it doesn’t seem to be preventing developers from forging ahead. There is the expectation of amplified population density as more high-rise residential buildings; college housing and office towers take the place of tenements, row houses, three- and four-story buildings, flophouses and saloons with disreputable pasts.
In a community where poverty, vagrants, music legends like the Ramones and clubs like CBGB were part of the fabric the evolution has generated many mixed emotions. The fate of the existing retail businesses that make up one of the city's last pockets of manufacturing, lighting, restaurant, and refrigeration equipment suppliers seems bleak. With rising rent pressures and very inviting buyout offers the millionaire’s row is born. And the building goes on.
Andrew A. Pittel is president of New York City-based Andrew A. Pittel & Company, LLC. He can be reached by e-mail at aapittel@pittelco.com. |
©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.
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