MetLife Bets $170M on Water Tower Place Revamp in Chicago

• MetLife Investment Management is investing $170 million to reposition Water Tower Place
• Upper floors will shift to office and medical office use, reducing retail exposure
• Magnificent Mile vacancy is falling, signaling renewed leasing momentum

How the redevelopment reshapes the asset

MetLife Investment Management is moving to transform Water Tower Place into a modern mixed-use property after years of declining retail performance. The plan focuses on concentrating retail where it performs best while introducing new uses above.

Retail and dining will be limited to the lower three floors, while the upper levels will be converted into office and medical office space. The redesign also includes a new Michigan Avenue entrance, improved ceiling heights, and more natural light, all aimed at pulling foot traffic deeper into the building.

This approach reflects a broader trend where landlords are right-sizing retail exposure and adding more stable asset classes into underperforming properties.

Why the property needed a reset

Water Tower Place has faced mounting pressure over the past several years. The departure of Macy’s in 2021, which occupied a large anchor space, accelerated vacancy issues and reduced foot traffic significantly.

The financial strain led to a major ownership shift. MetLife took control in 2022 after Brookfield Properties stepped away, as the asset value dropped below its roughly $300 million debt. That reset created an opportunity to rethink the property’s long-term positioning rather than continuing to operate it as a traditional mall.

Now, the focus is on adaptive reuse, turning a struggling retail asset into a more diversified income-producing property.

What this means for retail strategy

Instead of relying on large flagship stores, the redevelopment will introduce smaller and more flexible retail spaces. This is designed to attract newer and growing brands that have been priced out of oversized Michigan Avenue storefronts. For landlords and brokers, this signals a shift toward efficiency over scale. Smaller spaces lease faster, carry less risk, and allow for a more dynamic tenant mix that can better respond to changing consumer demand.

What this means for the Magnificent Mile

The timing of the redevelopment aligns with improving fundamentals along Chicago’s most prominent retail corridor. Vacancy rates, which surged during the pandemic, have started to decline and are expected to continue trending downward.

This project stands out as one of the larger institutional bets on the area’s recovery. By committing significant capital, MetLife is effectively signaling confidence that the corridor will stabilize and regain relevance. For investors, this kind of repositioning suggests that distressed urban retail assets can still deliver value when paired with the right mixed-use strategy.

What to expect next

Construction is scheduled to begin in 2027 and finish in 2028, with work phased to keep existing tenants operational. The long timeline reflects both the scale of the project and the complexity of repositioning a legacy asset in a dense urban location. If successful, the redevelopment could help redefine Water Tower Place for the next generation while reinforcing the broader recovery narrative of the Magnificent Mile. Water Tower Place is no longer just a retail story. It is becoming a case study in how landlords adapt aging assets to modern demand, blending uses to stabilize income and drive long-term value.