Water Tower Place owner gives up the property

A year after losing its retail anchor, Macy’s, Water Tower Place is losing an owner.

Brookfield Properties said Tuesday that it is turning over the vertical mall to its lender, a unit of New York-based insurer MetLife. The action indicates Brookfield believes the mall is worth less than an estimated $300 million in debt on the property.

It’s another setback for a complex that once defined retail chic but whose fortunes were cut down when the pandemic forced prolonged shutdowns. Water Tower Place, 835 N. Michigan Ave., also suffered from shopper reactions to growing crime along the Magnificent Mile. Incidents involving youths led the mall’s management to impose limits on when minors could visit unaccompanied by an adult.

The Macy’s closed early in 2021. Numerous other retailers closed for good at the mall, including the Foodlife food hall, Mity Nice Bar & Grill, Gap and Banana Republic.

Dave Franecki, spokesman for MetLife Investment Management, provided this statement: “Water Tower Place is a high-quality real estate asset that is well-positioned in the Chicago market. While we cannot comment on specifics of this transaction, MetLife Investment Management has a proven track record in institutional real estate and a dedicated team in the Chicago area. We look forward to discussing the future of this iconic shopping destination with our clients and other key stakeholders.”

Brookfield spokesperson Lindsay Kahn declined to discuss the transaction, first reported by Crain’s Chicago Business. She provided a statement that said, “Water Tower Place will no longer be part of Brookfield’s portfolio. After many discussions to carefully assess and identify all available options to move forward, we’ve determined that it is best to focus Brookfield’s resources on other opportunities within our portfolio.”

In the Chicago area, Brookfield still owns the Oakbrook Center and Northbrook Court malls.

Water Tower Place opened in 1975 and was then a pioneering effort to bring stores into a dense urban locale with a growing number of high-income residents. For years, the Michigan Avenue retail corridor could command high rents, but the pandemic has pushed the street’s vacancy rate to more than 20%, according to analysts.

In addition, some retailers find the mall’s multi-floor format unattractive for shoppers used to online commerce.