Water Tower Place Set for $170M Transformation on Michigan Avenue

One of Chicago’s most iconic retail destinations is about to undergo a major reinvention.

Water Tower Place, located at 845 N. Michigan Avenue in the heart of the Magnificent Mile, is set for a $170 million redevelopment that will reshape how the property functions for the future.

From Vertical Mall to Mixed-Use Destination

Originally opened in 1975, Water Tower Place helped define Chicago’s retail scene for decades. As one of the city’s first large-scale vertical malls, it became a cornerstone of Michigan Avenue shopping.

Now, the plan is to rethink that entire concept.

Under the proposed redevelopment:

Floors 1–3 will remain dedicated to retail and dining
Floors 4–8 will be converted into office and medical office space

The shift reflects a broader trend across major cities, where large retail properties are being reimagined into mixed-use environments rather than remaining traditional malls.

A New Interior Experience

The redesign includes:

Removing the existing escalators and water features at the main entrance
Opening up the lower levels to create a more open, atrium-like layout
Reworking the retail floors to accommodate smaller shops, flagship stores and new restaurant concepts

The goal is to create a more modern, flexible environment that better aligns with today’s shopping and dining habits.

Why This Matters for Chicago

Water Tower Place has long been one of the most recognizable retail anchors in Chicago, and its struggles over the past few years reflect larger changes in the industry.

The rise of e-commerce, combined with the impact of the pandemic, led to significant tenant losses. Most notably, Macy's closed its location in 2021, leaving a major vacancy in the building. Shortly after, ownership changes followed as financial pressures mounted.

Now, instead of trying to restore the mall to what it once was, the new plan leans in a different direction entirely.

Timeline and What to Expect

According to the owner, MetLife, the project will be built in phases to allow existing tenants to remain open during construction.

Construction is expected to begin in 2027
Work will continue through 2028
The building spans approximately 813,000 to 818,000 square feet

Phasing the construction is key, especially for a property that still has active retail operations and remains part of a high-traffic corridor.

What to Watch Moving Forward

The biggest question is whether this transformation can help revive leasing demand along North Michigan Avenue, which has faced ongoing challenges in recent years.

By reducing retail space and introducing office and medical uses, the redevelopment is essentially betting on a more diversified model, one that doesn’t rely solely on traditional shopping traffic.

It also raises a broader point about where urban retail is heading.

Instead of large, single-purpose malls, the future may lean more toward flexible, mixed-use spaces that combine shopping, dining, services, and workspace in one location.

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