Water Tower Place is about to get a complete $170 million makeover, a big step toward its recovery after years of financial struggle and the loss of several major tenants.
The eight-story vertical indoor mall will be replaced by a three-story retail center with small shops, flagship stores and a collection of new restaurants, according to a Monday statement by its owner. Floors 4 through 8 will be transformed into offices and medical office space.
The 813,000-square-foot mall at 845 N. Michigan Ave. was, ever since its opening day in 1975, the retail anchor of Chicago’s Magnificent Mile. The mall, one of Chicago’s largest, fell on hard times after getting hit by the rise of online retail and then the pandemic, losing its top retailer, Macy’s, in 2021, followed by the owner surrendering control of the property in 2022.
But the crowds of shoppers and tourists along North Michigan Avenue got thicker last year, and many retailers, large and small, are setting up new operations near Water Tower Place. That’s given owner MetLife Investment Management, which took control in 2022, the confidence to start pouring capital into the property.
“We’ve been planning this for four years,” said David Stone, founder and principal at Stone Real Estate and lead retail leasing agent for Water Tower Place. “The expectations were that the market would revive, and now it’s happening. With all the new stores that are arriving, it felt like the time was right.”
The National Confectionery Sales Association agreed earlier this month to open a 60,000-square-foot Candy Hall of Fame in 2027 at 830 N. Michigan Ave., one of the biggest post-pandemic leases signed at a North Michigan Avenue retail property.
Other new stores nearby include a two-story Chase/J.P. Morgan banking center, a magic-themed entertainment and dining complex at 100 E. Ontario St. called The Hand & The Eye, British menswear shop Charles Tyrwhitt, which will open its Chicago flagship on Tuesday at 625 N. Michigan Ave., and American Eagle Outfitters, which will open at 600 N. Michigan Ave. in 2027.
Leasing activity from retailers began accelerating in mid-2025, and the availability rate for retail space shrank from nearly 33.9% at the start of 2025, a historic high, to 28.5% by the end of the year, according to data from Kirsch Agency.
“A $170 million investment like this sends a clear signal that Michigan Avenue remains a strong place to do business,” Kimberly Bares, president and CEO of The Magnificent Mile Association, said in a prepared statement. “Pedestrian visitation is up, consumer confidence continues to build, and this announcement follows a steady stream of new concepts and openings. Taken together, this is not about a single project. It reflects broader momentum and a continued reinvestment in the future of The Mile.”
Water Tower Place will be getting a whole new look.
The escalators that now block shoppers’ views at the entrance will be placed on the sides of the mall, opening up clear sight lines across the entire property, Stone said. That should encourage more foot traffic, as few shoppers today want to wander up and down a massive, indoor vertical mall.
“Today people are all about being more efficient,” Stone said. “They want to know where they’re going, rather than the hunt-and-peck process we used to see.”
And instead of a massive anchor tenant like Macy’s, which occupied more than 300,000 square feet across eight floors, Stone said the new Water Tower Place is likely to have many smaller flagship stores, such as American Girl Place, which in 2024 signed a lease for 34,000 square feet on the first and second floors.
Stone said he also expects many Water Tower Place stores will maintain healthy online shopping operations and use the mall as a way to establish a brick-and-mortar presence.
“Ten years ago, people expected brick-and-mortar stores to vanish, but retailers now know that online and brick-and-mortar need to work together,” he said.
Construction on the new Water Tower Place will begin next year and wrap up by 2028, Stone added. Existing tenants will remain open throughout construction.
Stone said he also wants to attract a new set of restaurants, and reestablish Water Tower Place as a trendsetter for the city’s dining scene. Back in the 1980s and 1990s, the mall was home to several trendy restaurants run by Levy Restaurants or Lettuce Entertain You, including D.B. Kaplan’s Delicatessen and Foodlife.
“People came to Water Tower Place not just to shop, but to eat,” Stone said. “We need to get this right, because Water Tower Place is very important to both Chicago and (North) Michigan Avenue.”
