Saks closing Mag Mile men’s store, combining with flagship
By: Micah Maidenberg
Saks Inc. is closing its standalone men’s store on North Michigan Avenue, teeing up a $5 million renovation of its department store across the street.
New York-based Saks is jettisoning the 36,000-square-foot men’s store at 717 N. Michigan Ave. after a roughly 15-year run.
The company expects to close the men’s store in 2014, moving its merchandise to the sixth and seventh floors of the department store at 700 N. Michigan Ave., a Chicago-based spokeswoman said. The renovations at 700 N. Michigan are expected to cost around $5 million, according to the BidClerk.com, a construction industry data provider.
The project includes express elevators and a seventh-floor restaurant overlooking the Magnificent Mile, the spokeswoman said.
The move is part of broader effort by the upscale retailer to focus its sales strategy on its best performing outlets, while closing weaker links in the company’s lineup. Saks’ strongest stores are “undergoing renovations this year,” according to a recent report by the New York-based securities unit of Australian investment firm Macquarie Group.
“The largest project related to full-line stores is the relocation of the Chicago men’s store to main store,” the Macquarie report said.
Saks launched a line of men’s apparel in the mid-1990s, creating separate stores for male shoppers into an exclusive retail setting. Now, amid the intense pressure to cut costs among all department store chains, gathering customers under one roof should allow Saks to run its operations more cost efficiently.
“Moving back into the flagship moves them closer to other Saks customers,” said David Stone, founder of the Chicago-based brokerage Stone Real Estate Corp. “They probably thought, ‘We didn’t need that expensive real estate because the buyers are not what they used to be.’ ”
In an emailed statement, another Saks spokeswoman said the firm will gain savings by combining the stores, but she doesn’t say how much.
Saks leases the 159,000-square-foot department store at 700 N. Michigan Ave., which is owned by a venture that includes New York-based ACHS Management Corp.
The spokeswoman declined to comment on the terms of the lease, saying, “We are making a very
substantial investment in our Chicago flagship, and look forward to its continued, long-term success.” An executive with ACHS could not be reached for comment.
The move is timed with the expiration of Saks’ lease for 717 N. Michigan, a three-level store including the basement.
For the building’s owner, a venture of Stockholm-based pension fund manager Alecta, Saks’ move could prove to be a blessing.
While Alecta must now find a new tenant, it has the opportunity to replace a lease from the late-1990s with a new deal at much higher rent, Mr. Stone said. Ground-floor rents are currently in the $400 to $500 per square foot range.
“I think we’re just considering all our options,” said an Alecta spokesman based in the company’s San Francisco office. The company has hired Oak Brook-based Mid-America Real Estate Corp. to find new tenants for the building.
The renovation of Saks’ department store is expected to start this spring. To make way for the men’s store, women’s lingerie and underwear currently on the sixth floor will be moved to the fourth floor, while the home department will be phased out, Saks’ Chicago-based spokeswoman said.
The seventh floor is currently a non-selling floor, with back-of-the-house operations.