Water Tower Place is set for an estimated $170 million redevelopment that will reimagine the lower floors of the Magnificent Mile shopping destination, as it celebrates its 50th anniversary this month.
Owner MetLife Investment Management announced Monday that it would consolidate the first three floors of the property for retailers — opening up the area and adding an atrium — and have floors four through eight be used for other tenants, such as office and medical.
“So many people have cherished memories of their visits to Water Tower Place over the last half century,” Matt Sharples, MetLife’s regional managing director, said. “While we are still in the design phase, as envisioned this investment will fund significant improvements, reinforcing Water Tower Place as a high-traffic, flagship retail, dining and entertainment destination on the most visited shopping street in Chicago.”
Construction is set to begin in 2027 and finish in 2028. The work will be done in phases to allow existing tenants to remain open.
Water Tower, at 835 N. Michigan Ave., was a major shopping and tourist destination, but the pandemic hit the mall hard. It’s anchor tenant Macy’s closed in 2021, followed by other retailers such as Gap and Banana Republic. A year later, New York-based insurer MetLife took over the property.
The mall’s current retailers include Lego, American Girl and Adidas, as well as entertainment options like the Chicago Sports Museum.
Prior to the pandemic, Water Tower had a 15% vacancy rate, according to David Stone, who is leading the mall’s retail leasing and is the founder of Stone Real Estate. Now, the mall has a 30% vacancy rate for specialty stores, which doesn’t include Macy’s former space.
Nearby store openings on Michigan Avenue will be beneficial for Water Tower, Stone said.
Mag Mile has seen a resurgence of retailers recently, with brands like Mango and Uniqlo opening shops, as well as American Eagle, which has plans for a flagship store.
“We want the street to continue this recovery because in retail, the more the better. Everybody wants to be around other people in their category, or even competitors often want to be near each other,” he said. “I think this is such a good time to announce this project because the street has recovered so fast in the last 12 to 24 months. So there’s real momentum building, and we want to make sure we’re part of it.”
He said retailers are often adverse to risk, but new attractions like the Harry Potter Shop, The Hand & The Eye and plans for the Candy Hall of Fame have changed their minds.
“Retailers are not pioneers. … Once momentum builds, retailers view it as a place they need to be instead of a risk that they don’t want to take,” Stone said.
Water Tower’s redevelopment is aimed to entice the upper middle class to shop. Stone said it’ll be the largest construction project on North Michigan Avenue in the last decade, excluding the Tribune Tower renovation.
Some of the retailers the property is looking to attract include women’s specialty stores, apparel and beauty brands and experiential concepts. Stone estimates filling about 10 vacant storefronts.
Several cafes and bars will likely replace the former Foodlife food hall on the mezzanine level, and conversations have already begun with several “significant Chicago-based restaurant operators,” he said.
