The move represents a continuation of an unfortunate trend for the Mag Mile, which has been awash with empty space after many tenants left since the start of the COVID-19 pandemic, including Gap, Macy’s, Uniqlo and Timberland. The Strip’s vacancy rate jumped to nearly 29% this summer, from 15% before the public health crisis, according to Cushman & Wakefield. That number will increase further with the loss of Banana Republic, which leases nearly 39,000 square feet over four floors.
The departures provide an opportunity for the Mag Mile and its owners to reinvent the neighborhood with new concepts that exist in a few other locations, such as the Starbucks Reserve Roastery at 646 N. Michigan Ave., Caruso said.
“Michigan Avenue has turned into nothing more than a regional mall,” Caruso said. “There is nothing exclusive about the brands” that exist now.
A few recent leases over the past year have offered glimmers of hope that the boulevard may be on the verge of returning. In June, Canadian womenswear chain Aritzia leased the former Gap store at 555 N. Michigan Ave., the largest retail on the Strip since 2015. New Mag Mile tenants also include Swarovski, the Museum of Ice Cream and It’Sugar.
In another encouraging sign, the owner of Banana Republic recently signed a 10-year lease renewal with jeweler Tiffany, two doors down south, Caruso said. Ralph Lauren, another major tenant in the building, also renewed its lease for the past two years, he said. He declined to discuss the terms.
But Victoria’s Secret could close its store in the building, if Caruso manages to find another tenant for its space. After the lingerie chain expressed interest in leaving, Caruso began marketing the 23,000 square foot space for rent last year. Victoria’s Secret still has about three years left on its lease, but a termination clause could end it sooner.
Caruso represents the owner of the commercial building between Superior and Chicago avenues, Pontegadea, a Spanish investment company run by billionaire Amancio Ortega, founder of the Zara chain. A Pontegadea company paid $350 million for the building at 730-750 N. Michigan Ave. in 2007.
A Pontegadea representative did not return a phone call.
Caruso didn’t know when Banana Republic was planning to close its store. Representatives for the chain, which is owned by Gap, the San Francisco-based retail conglomerate, did not respond to requests for comment.
The Mag Mile, which stretches from the Chicago River to Oak Street, is one of the city’s top tourist destinations. The boulevard suffered during the pandemic in 2020, first when shoppers and tourists stayed home, then when rioters vandalized and looted stores. More recently, shootings, carjackings and other crimes in the surrounding neighborhood have damaged the Mag Mile’s image, so much so that public safety was the biggest concern cited in a recent report by the Urban Land Institute exploring ideas for transforming the shopping district.
Like Caruso, the Urban Land Institute report also described the homogeneity of the boulevard as a weakness.
“Most North Michigan Avenue retailers are in any major suburban mall, and the merchandising is largely identical to what shoppers can find elsewhere, including online,” the report said. “Dining and entertainment options are also limited.”
Caruso believes the Mag Mile can regain its mojo if it attracts new brands with unique offers and experiences, not what shoppers would find in a mall or online. He is optimistic that Aritzia will accomplish this with its new flagship and is encouraged by Swarovski’s plans for its new store. Called Wonderlab, the Swarovski store will feature Swarovski crystals in a dreamlike and colorful immersive experience.
Caruso said he was also aiming to find a “unique user” for the Banana Republic space.
“That’s what Michigan Avenue needs,” Caruso said. “If you look at it that way, there’s no shortage of tenants who can occupy this space.”
