December 01, 2003

Crain’s Chicago Business

Mag mile? Not quite

North of the river, Michigan Ave. is a shopping haven. South, it's a stately cultural district. But the stretch between Wacker and Randolph is as welcoming as a dimly lit tunnel.
From Oak Street to the Chicago River, Michigan Ave. is a magnificent stretch of sparkling boutiques and ritzy hotels, with 100,000 shoppers daily trolling its treasures during the holiday shopping season.

But cross the Michigan Ave. bridge heading south, and the street becomes a dark, cramped corridor with a hodgepodge of stores offering hot dogs, cakes, subs, nail care, souvenirs and off-price vitamins. Many are shuttered on weekends. Empty storefronts and scaffolding on some older buildings contribute to the desolate look.

Sure, it's only a few blocks from Wacker Drive to Randolph Street, where Millennium Park and cultural amenities pick up again, but for tourists and shoppers, this patch of Michigan Ave. is as welcoming as a dimly lit tunnel.

"It's a very big leap across the river," says David Stone, president of Stone Real Estate Corp., which specializes in Loop property. The stretch is more an extension of the Loop than a likely continuation of the Michigan Ave. shopping district, real estate experts say. The river is a natural barrier, and the buildings just south of the bridge are filled with office workers who support service retail such as pharmacies and fast-food outlets on weekdays, he notes.

"The pedestrian traffic along that stretch is really good and strong, and it's not high-end or tourist traffic."

But others view the strip as an embarrassing gap between the Magnificent Mile to the north and cultural treasures to the south.

"Those blocks need to be polished and freshened," says Russell Salzman, president and CEO of the Greater North Michigan Ave. Assn., which includes the blocks south of the bridge. "It's part of our landscape, and a gateway to the Michigan Ave. shopping area." The association is working with building owners, most of whom lease to small tenants, to comply with the area's signage requirements.

Just as retailers followed Nordstrom's lead south across Ohio Street, establishments looking to do business with the 20 million pedestrians who annually shop, nosh and tour Michigan Ave. may also set up shop across the river. And with Mag Mile space north of the bridge renting at a premium to mid-level retailers such as Guess and the Gap, high-end retailers that don't need a lot of floor space — but covet Michigan Ave. frontage — may come marching down the street.

Hard Rock Hotel as linchpin

"We've been seeing a migration (of retailers) south to the river," says architect Lucien Lagrange, whose projects span the Avenue. "Now, they're going to have to jump the river."

C. D. Peacock, a fine jeweler synonymous with Chicago, has had a store on Michigan Ave. just south of the bridge for three years. Even though it has another store in the Nordstrom-anchored Westfield Shoppingtown North Bridge mall just up the Avenue, new hotels south of Wacker Drive and the development of Millennium Park drove the decision to lock in an on-the-Avenue space, says Walter Corey, who handles operations and marketing for Oak Brook-based C. D. Peacock.

"There's more than a logical reason to be on that portion of Michigan Ave.," he says.

Another looming reason for retailers to make the leap to Central Michigan Ave. — as some call this part of the boulevard — is the scheduled opening this month of the Hard Rock Hotel Chicago in the Carbide and Carbon Building at Michigan and South Water Street. The ground floors of the hotel — a reuse of the 1929 Art Deco granite and terra-cotta office tower — have been opened up to meet the street; features will include a three-story glass entry and a restaurant designed so pedestrians can look in and diners can gaze out.

"With the amount of foot traffic passing, it makes great sense to have this open and inviting front," says Kit Pappas, general manager of the hotel. "It's a very dramatic view, inside and out." The 381-room hotel is expected to attract business travelers during the week, tourists on the weekend and high-end retailers to its flanks.

The hotel will be the linchpin for the area's renewal, some observers say. Others aren't so sure.

"The (Magnificent) Mile is finite," says George Whalin, president and CEO of Retail Management Consultants in San Marcos, Calif. "It's very hard to extend successful retail streets. They tried it with Rodeo Drive, they tried it with Worth Street in Palm Beach. It just doesn't work."

But building owners in the Central Michigan corridor could have at least one advantage if they chose to court high-end retailers in the wake of the Hard Rock's opening: On upper Michigan Ave., retail space runs $100 to $300 per square foot. South of the bridge, the range is $35 to $55.

Before 1920, the two sides of the Avenue weren't even connected. The river was a smoky wharf-and-warehouse district, its waters clogged with tugs and freighters. The Chicago Plan of 1909 called for a bridge, completed in 1920, to link the business district on the south to the then-sleepy residential area to the north. It also called for a wide boulevard lined with tony shops, hotels and apartment and office buildings — roughly today's North Michigan Avenue.

South of the new bridge, the Avenue remained a business district with offices and elite dining clubs. Retail was incidental, because the main shopping district was just a few blocks away, on State Street.

In the 1960s, the gargantuan Illinois Center was laid out east of Michigan. But its planners ignored the boulevard, instead cocooning the center's shops and restaurants in an indoor village.

"History has worked against that stretch of the street," says Brent Ryan, assistant professor in urban planning at the University of Illinois at Chicago and co-director of its City Design Center. "But there's a tremendous amount of foot traffic, and the time is right to reconsider."

Coming Millennium

Millennium Park is chief among the reasons to spruce up the neighborhood. More than 10 years in the making, the park sits on 26 acres at the north end of Grant Park and features an ice rink, music and dance theater, formal gardens, a restaurant, reflecting pools and an extraordinary band shell designed by Frank Gehry. Three million people are expected to visit the park annually, generating $150 million in new tourist revenues, according to the Chicago Office of Tourism.

But with numerous delays, no one is certain of the park's completion date; the band shell may open this summer. And even then, it's unclear whether park patrons, who may be coming for a dance production or concert, will be in the shopping mood.

"Millennium Park will give people a reason to walk up Michigan Ave., but the jury's still out on what they might stop and buy," says real estate executive Mr. Stone. "They might stop for a burger, they might stop and buy some jewelry; anything's possible. But until it's complete, we won't know its impact."

With Loop office buildings made over into residences and new residential towers rising east of the Avenue, others think Central Michigan could house boutiques, bookstores and restaurants that appeal to tourists and residents alike.

"You need both," says Bob O'Neill, who heads the Grant Park Advisory Council, a community group. "The park is an incredible asset, but (North Michigan Ave.) needs a mix of tourists and residents." The Hard Rock Hotel is key, he says, because it will bring round-the-clock activity to a stretch of street that sorely needs it.

©2003 by Crain Communications Inc.

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