Latsko lands luxe consignment retailer on return to Gold Coast
One of Chicago’s biggest owners of retail real estate is bringing luxury consignment store The RealReal back to the Gold Coast.
Fred Latsko and his Latsko Interests scored a 2,250-square-foot deal for a 10-year term with The RealReal, a publicly traded reseller of authenticated high-end clothing and accessory brands, at 66 East Walton Street, according to a person familiar with the transaction. The tenant trades under the ticker symbol REAL on the Nasdaq exchange.
Its latest Chicago lease is a recommitment to the Gold Coast retail market after The RealReal opened what was then its biggest store ever in a two-story, 12,000-square-foot space at the Franklin Partners-owned 940 North Michigan Avenue in 2020.
Earlier this year, the company announced the Magnificent Mile location would close, along with five other stores and offices including an 8,000-square-foot shop in San Francisco, where it is based. The firm also planned to cut about 230 employees, according to previous reports.
TheRealReal takes possession of the Walton Street property early next year. It is still paying its rent for the Michigan Avenue space it ditched, and working to sublease it to another user, according to a person familiar with the company’s plans.
Neither TheRealReal nor Latsko returned requests for comment.
The deal is another hit to Michigan Avenue, where the retail market has struggled with vacancy rates rising to nearly 30 percent in the wake of the pandemic. Rush Street remains attractive to retail tenants across the spectrum of brands ranging from Dior to Lululemon. Walton Street, meanwhile, serves as a less expensive alternative for tenants, retail market insiders told The Real Deal.
While retail rents on Rush Street can run for more than $400 per square foot, Walton’s retail lease rates are about $200. Lease rates go up for locations closer to Rush, the sources said. On Oak Street, which is more exclusively ultra-luxury shops, rents run for $350 per square foot in part because there is less pedestrian traffic. Some luxury tenants prefer Oak Street over Rush Street despite the latter’s large volume because it weeds out visitors who aren’t high-end buyers.
One insider said that he expects lease rates for the Michigan Avenue space TheRealReal rented from Franklin Partners came to around $100 per square foot altogether, including the less expensive second-floor space that was included in the deal.
For Latsko, The RealReal’s lease follows a new financing package he took out this fall on his significant Gold Coast retail portfolio. He picked up a new $34 million loan from Chicago-based JDI Realty for the retail properties at 66 East Walton, 900 North Rush, 41 East Oak and 23 West Maple streets. All the properties are high-end retail spaces occupied by jewelers, fashion houses and other shopping-focused tenants.
It’s unclear why the loan was about $10 million less than the previous one, which was issued in 2018, according to public records. But Loancore was exploring selling the debt as it reached its maturity this summer, which is sometimes a move made before a loan buyer attempts to foreclose upon a property, according to a person familiar with the properties.
TheRealReal is replacing sporting goods retailer Wilson at 66 East Walton. Wilson had a short-term lease deal.
