Nike store part of Michigan Avenue real estate deal

In one of the biggest retail real estate deals in Chicago history, a British investor paid $295 million for the Michigan Avenue property that includes a five-story Nike flagship store.

Real estate investment manager Meyer Bergman bought three buildings connected to 663, 669 and 673 N. Michigan Ave., paying about $1,990 per square foot for the 148,245 square foot property on the Magnificent Mile shopping strip, according to Cook County property records.

This is the fifth highest price ever paid for a commercial building in the Chicago area, according to New York-based research firm Real Capital Analytics.

The high price likely means London-based Meyer Bergman is taking a long-term view of the site, where he could eventually build taller structures to boost the property’s value. Zoning is in place to possibly build an additional 229,323 square feet on the site, according to a flyer from Chicago-based Cushman & Wakefield, which was hired in March to sell the building.

“It’s great real estate,” said Stanley Nitzberg, director of Oakbrook Terrace-based brokerage firm Mid-America Real Estate, which was not involved in the deal with Nike. “It’s the 50-yard line. I think it’s a shrewd and smart investment by an offshore entity looking to get better returns than it could in its home base, and find a safe home in the United States.”

Meyer Bergman’s first contract here is also believed to be the first large commercial building in Chicago to sell at a cap rate — or first-year percentage return — of less than 4%, Nitzberg said. Capitalization rates move in the opposite direction to real estate prices.

“For us, the cap rate seems to be a high point. In London and Paris, they are setting cap rates of 1% for high street retail.”

Michael Marks, a senior director at Cushman & Wakefield who led the property’s sales team, could not be reached for comment. A spokeswoman for the seller, the Wisconsin State Board of Investment, did not respond to a request for comment.


The deal was reached on September 23, according to county records. It was the 23rd largest retail transaction in the United States so far in 2015, according to Real Capital Analytics.

It was only the second U.S. deal for Meyer Bergman, which specializes in European commercial properties, according to its website. In June, he bought another shoe flagship, a 7,500-square-foot Converse store on Third Street Promenade in Santa Monica, Calif., according to the site.

The company’s Meyer Bergman Americas unit was established in January, with offices in New York and Los Angeles, and “focuses on identifying retail-focused mixed-use properties in key hub cities stocks with the ability to extract value through active asset management,” the website says.

A spokesperson for Meyer Bergman declined to comment.

Nike leases 57,316 square feet of store space in the five-story building at 669 N. Michigan and Nike Training Club space in the three-story structure at 673 N. Michigan Ave. In this building, fashion brand Cole Haan leases 11,570 square feet.

The Garmin GPS device seller is set to vacate 15,607 square feet on the lower three floors of the nine-story structure at 663 N. Michigan Ave., where its lease expires in November 2016. That building will be completely empty when Garmin leaves.

Meyer Bergman takes over the property at a time of flux on the famous shopping avenue. The next door, Apple plans to leave 679 N. Michigan for Chicago-based space Zeller Realty Group plans to create in the office building it owns at 401 N. Michigan on the north bank of the Chicago River.

Next to 401 N. Michigan, the 36-story The Tribune Tower is for sale. Its buyer should add a second tower and additional commercial space extending to the street.

Nike opened its Michigan Avenue store in 1992 as Niketown, one of the first retail concepts to combine shopping and entertainment. The shop closed for six months in 2012 for renovations before reopening under the new name Nike Chicago.

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