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CHICAGO-CB Richard Ellis has been retained as leasing agent for 730 N. Michigan Ave. by building owner Ponte Gadea, of Coruna, Spain. The 238,000-square-foot retail property is prime real estate in downtown Chicago, neighboring the iconic Water Tower and located in the iconic Magnificent Mile stretch of Michigan Avenue at Chicago Avenue. The building faces leasing challenges, at only 65% occupied following the recent departure of major tenants including American Girl and CompUSA.

“This is really an opportunity for someone who is looking for a flagship presence and to make a statement in a big contiguous block of space on Michigan Avenue,” says Bruce Kaplan, SVP with CBRE, who along with associate Todd Siegel will lease up the space. “We’re looking for people who may not yet be represented in the US or in Chicago who want to come into our market. Chicago is becoming more and more of an international market, and someone could really make a statement with a store like this with an enormous amount of presence and visibility.”

Asking lease rates have not yet been determine, pending work on the building which will demolish the existing space and revert it to clean space. However, Kaplan says ground level space on Michigan Avenue commands a high price. Average asking rents for all space in the Michigan Avenue submarket are around $70 per square foot, but ground level space runs around $500 per square foot.

“That’s the highest it’s ever been, and I suspect that’s going to creep up even more despite the recession because there’s such limited ground floor space,” Kaplan tells GlobeSt.com. “I expect the value of ground floor space to be firm because there’s so many people looking, so we haven’t really seen any softness at all. The street really has held its own in terms of maintaining its rental rate despite the softness in the economy.”

At the time of CBRE’s most recent Michigan Avenue research in mid-2008, the occupancy rate was around 94%. The market only offers around 3.2 million square feet, Kaplan says, and last year, only had around 203,000 square feet available. Kaplan says he expects when his firm does its 2009 survey in the coming months, the occupancy will have actually increased to the level it has maintained historically – around 96%.

The property offers high ceilings and hundreds of feet of frontage along Michigan Avenue. Current tenants include Tiffany & Co., Polo/Ralph Lauren, RL, Banana Republic, Peninsula Hotel and Victoria’s Secret. The building touts a strong track record, Kaplan says, given the fact that American Girl got its start there and has since moved into a larger space across the street at Water Tower Place.

“This location has proven its own success and viability by virtue of the fact that American Girl hit the ball out of the park here,” Kaplan says. “There’s hardly any other space available on Michigan Avenue that offers street frontage and additional contiguous space inside.”

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