By Dessany Zaruma and Nguyen Thao Phuong Dang
@redlineproject
As major retailers like Sephora and Banana Republic exit the space early 2024, questions emerge about the future of Water Tower Place on the Magnificent Mile and what this drift means for urban retail overall.
The mall’s deflation isn’t just a business story — it’s also about how the heart of downtown Chicago is changing. The mall has been a milestone since 1975, drawing locals and tourists to its high-end shops and its architecture.
But the rise of online shopping, downtown crime and shoplifting has left its floors empty. With major retailers like Forever 21 and Akira exiting the past few years, questions take shape about the mall’s future and what its downturn means for downtown Chicago.
“I used to come here every Monday with my daughters,” said Jacqueline Salazar, looking around Water Tower Place’s closed storefronts. “Now it feels like a ghost town.”
Once a thriving retail space on the Mag Mile, Water Tower Place has seen a dramatic drop in foot traffic and store closures are accelerating.
According to Stone Real Estate’s 2023 Annual Loop Retail Survey, the Loop retail vacancy rate hit 30.1%, marking the fourth consecutive year of growth. This is due in part to closures of major retailers like Walgreens, Old Navy, Journey’s, and Vans many of which had locations along Michigan Avenue and nearby.
Furthermore, the Chicago Loop Alliance finds that pedestrian traffic in downtown Chicago has resumed pre-pandemic levels, with more than 1.5 million pedestrian interactions on State Street in an average week. Although pedestrian traffic has recovered, several storefronts are still empty, indicating a mismatch between the foot traffic and retail space leasing levels.
These events indicate that although downtown Chicago is seeing a rise in foot traffic, the retail industry is still lagging in keeping up with evolving consumer habits and market trends.
Salazar, a mother of two, said she used to stop by Water Tower Place after her daughters’ tutoring sessions across the street.
“We’d grab a snack or just walk around and window shop,” she said. “Now, every time I come in, it’s like a piece of those memories is gone. It’s heartbreaking.”
Like many shoppers, they grew up with vivid memories of Water Tower Place, whether it was back-to-school shopping, holiday visits, or casual afternoons with family.
“It’s sad, honestly,” said Teresa Rodriguez, who worked at the Banana Republic in Water Tower Place until it closed in early 2024. “We didn’t have many customers toward the end. Most days, it was just people walking through, taking photos of the mall. Hardly anyone was buying.”
The overall economic impact raises concerns about how many workers could lose their jobs as more stores continue to close inside the mall.
Since 2020, a mix of national and local challenges has altered downtown business. After the George Floyd protests, riots led to mall closures and left a lasting dent in public trust in the area. At the same time, the pandemic changed how people shop, fewer people went to stores, and many businesses just couldn’t survive the shift. Water Tower Place was no exception.
Small businesses near the mall are having an impact due to the mall being inactive. Many of them relied on steady constant customers from Water Tower Place to keep their doors open. As the mall empties out, fewer shoppers pass by, which means fewer customers for nearby cafes and shops. Without that daily stream of potential customers, local businesses are struggling to make the same income and some may not be able to find a job as quickly.
Across the country, malls are turning into experience centers — live performances, selfie museums, rooftop bars, and interactive pop-ups. The American Dream Mall in New Jersey and even parts of Navy Pier have leaned into this shift. But Water Tower Place has yet to fully evolve, raising the question: Can it catch up?
“Many retailers have become so focused on cost that they’ve lost the customer experience,” said Brad Bane, a marketing professor at UIC. “Why would I inconvenience myself or pay extra if I’m getting a worse experience? Add in private equity ownership and venture capital pressure, and it’s created instability leading to closures and bankruptcies.”
On Chicago’s specific situation, Bane noted that while crime is often cited, much of the concern may be driven more by perception than reality.
“Broadly, crime rates are down across the country and are now below pre-COVID levels in many places,” he said. “The Magnificent Mile is actually one of the safest parts of the city. Still, the perception of crime, even if exaggerated, is clearly impacting retail foot traffic.”
When asked if Water Tower Place could adapt and survive, Bane said, “I don’t see any systematic reason it can’t. But they have to figure out what it means to adapt.” He referenced examples like Barnes & Noble’s rebound through local customization and experience-based offerings. “Look at successful museums or even concerts, attendance is way up since 2019. If the Water Tower can pivot toward experience and tailor itself to Gen X, Millennials, or Boomers with spending power, it has a chance.”
The store closure from 2017 to 2019 closed over 9,000 stores across the U.S., and the effects of COVID-19 made things worse. Customers grew more dependent on remote work, and in-person retail never fully went back to how it was.
Some shopping centers around Chicago are trying to reinvent themselves by offering pop-up shops, and unique experiences to bring people in. It’s working for some places however the Water Tower Place, despite its prime location and past popularity, is still struggling to attract customers.
In response to those challenges, there’s now talk of repurposing Water Tower Place’s retail-heavy space into a hybrid model that includes medical offices, entertainment zones, and other non-retail uses. According to CoStar News, mall owner Brookfield Properties is considering a redevelopment plan that could drastically reduce the mall’s retail footprint, possibly slashing it in half.
Meanwhile, some local business leaders remain hopeful. In a recent article by Block Club Chicago, stakeholders emphasized that while Water Tower Place may be past its prime as a mall, the broader Magnificent Mile corridor is showing signs of recovery with new hotels, flagship stores, and residential developments helping to bring people back downtown.