The owner of Water Tower Place is launching a more than $170 million redevelopment of the property, ushering in a new era for the Magnificent Mile’s oldest vertical mall.
Landlord MetLife Investment Management has unveiled plans for a massive overhaul that will open up the property’s lower floors with high ceilings and an atrium. The makeover involves removing the two-story escalator and reconfiguring retailers on the ground floor into a pedestrian arcade, with restaurants on the mezzanine level visible when people walk in.
It’s a major capital investment on North Michigan Avenue as the retail corridor regains momentum after years of challenges with vacancy, and one that comes about four years after the mall changed hands via a deed in lieu of foreclosure.
“It’s an expression of confidence, and the market has come to us,” said Stone Real Estate founder and principal David Stone, who is leading the property’s retail leasing efforts.
A rendering of a revamped Water Tower Place, which would include removing the existing two-story escalator to create an atrium (Neumann/Smith)
A high-rise shopping center was a novelty when the nine-story mall at 845 N. Michigan Ave., the first of its kind in Chicago, opened in 1975, but “every building that’s been around 50 years needs to update itself and this is our time,” Stone said.
“Water Tower was one of the best shopping centers in the United States for most of its 50-year tenure. But these are things that need to be improved, given today’s shopping patterns,” he said. “Everybody has a story about Water Tower from when they were growing up, when they went here with their parents, with their grandparents — their first date, their first shopping trip downtown,” Stone said. “We want to make sure that people have a different story, but still a great story, to tell about Water Tower Place for the next 50 years.”
MetLife took control of Water Tower Place in 2022. When the property’s former owner opted to walk away from the asset, the mall had lost multiple tenants after the onset of the COVID-19 pandemic, including the Foodlife food hall on the mezzanine level and a 324,000-square-foot Macy’s department store.
MetLife authorized brokers to market the upper floors for uses other than retail, such as office and medical office space, in 2023. With shopping-oriented space consolidated to the first three levels, the redevelopment aims to create a more intuitive experience for shoppers to boost foot traffic and sales.
“While we are still in the design phase, as envisioned, this investment will fund significant improvements, reinforcing Water Tower Place as a high-traffic, flagship retail, dining and entertainment destination on the most-visited shopping street in Chicago,” MetLife Regional Managing Director Matt Sharples said in a statement.
Stone said the repositioning will create more small-shop space for retailers, which is in demand as leasing picks up on North Michigan Avenue and as the age of e-commerce has led brands to realize they can do the same amount of sales with less square footage.
Stone hopes to draw retailers from the “aspirational lifestyle” category — brands that fall between the mass market and luxury tiers. He doesn’t see the mall as a direct competitor with the 900 North Michigan Shops, which has a more upscale tenancy that plays off its proximity to Oak Street.
“I think it’s a different animal,” Stone said of Water Tower Place.
The leasing team is focused on bringing in apparel retailers with footprints between 1,000 and 7,000 square feet for the first two floors, in addition to filling the Macy’s space with an anchor retailer and experiential uses for the third.
Work on the redevelopment is still in the design and planning phase, with construction expected to start in 2027 and be mostly complete in 2028. Construction is set to happen in phases so existing tenants can stay open.
Not counting the former Macy’s space, the retail portion of the property is about 70% leased today to tenants including American Girl Place, Lego, Free People, Hollister, Eileen Fisher, J. Hill, Chico’s and Aeropostale, among others.
Overall, the Mag Mile’s availability rate, which includes space that’s both vacant and being marketed for lease, was 28.1% at the end of 2025, according to data from retail brokerage Kirsch Agency. That’s down from a high of close to 34% as the corridor grappled with the fallout from the pandemic, the remote-work trend and the reality and perception of crime.
The northern third of the strip has been slower to recover than the rest of the corridor. Recent deals and openings that include new tenants American Eagle Outfitters, Mango and Harry Potter Shop Chicago, as well as Uniqlo’s return, have been concentrated on the middle portion of the avenue. But the northern end of the street got some good news in recent weeks with the announcement that the Candy Hall of Fame Experience will occupy 60,000 square feet at 830 N. Michigan Ave.
“I think Water Tower is the last major piece of the puzzle of North Michigan Avenue,” Stone said.