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What winds up on the site of the soon-to-be-closed downtown St. Paul Macy's store may be a far bigger surprise than the fact the store is closing at all.
It could give rise to a number of boutique stores to replace the merchandise and services that Macy's offered, or maybe provide the setting for an office tower with street-level retail.
While little was clear Thursday about the future of the Macy's site, Mayor Chris Coleman said that downtown St. Paul is better positioned now to absorb the store's loss and convert it into a gain than it was in 2001, when the mayor and City Council members -- including Coleman -- gave Dayton's a $6.3 million forgivable loan to stay open through 2012.
"You've really got a vibrant mix in downtown that we didn't have a decade ago, when the decision was made to help Dayton's stay open," he said. "We had only a couple of eggs in only a couple of baskets."
Now, the mayor said, downtown St. Paul is attracting more residents than ever, visitors have a number of good restaurants and bars to choose from, and a light-rail line will open next year "with a stop right at [Macy's] front door."
So Coleman said that forgivable loan turned out to be a bridge taking downtown from days when it could ill afford to lose a major retailer, to today when he said the site has never been more appealing.
Other downtown leaders echoed Coleman's analysis Thursday, saying that while the store closing is a shame, it gives the city a chance to better tailor downtown to address modern urban lifestyles.
"The psychic hit is much worse than the practical hit," said Matt Kramer, president and CEO of the St. Paul Area Chamber of Commerce.
The Macy's site will be an easy and desirable one to redevelop, he said, in no small part because Macy's owns the entire building and there are no additional tenants.
"And now it's bounded on the Cedar [Street] side with a light-rail stop. They can brand it on Cedar as well as Wabasha," he said.
"The real question is, what do we shoot for? I don't want to see a Block E in St. Paul," said City Council Member Dave Thune, referring to the disappointing development in downtown Minneapolis.
Department stores closing
Macy's announced its decision to close the St. Paul store in a national press release Thursday. In addition to St. Paul, the company is closing stores in Pasadena, Calif.; Belmont, Mass.; Honolulu and Houston, along with a Bloomingdale's in Las Vegas. It called them "underperforming stores that no longer meet our performance requirements."
Departments stores, which some retail experts consider an outmoded shopping model, have closed in both urban and suburban locations nationwide in recent years. Downtown Minneapolis recently lost Neiman Marcus, and Macy's closed Bloomingdale's at the Mall of America last year.
The St. Paul store, a five-story building opened in 1963, measures 362,000 square feet. Even after Dayton's reduced its retail space to 210,000 square feet in 2001 as part of its $20.4 million renovation, it was still bigger than six new Macy's stores and three new Bloomingdale's that the company also announced Thursday.
Macy's said that 153 people work at the St. Paul store, a bigger staff than at the other stores being closed. Workers may be offered jobs at other nearby stores, and the company said that eligible full-time and part-time workers who are laid off will be given severance packages.
Rumors of the store's closing began to swirl among employees as the loan deal expired this week. On Wednesday, employees at the store said they hoped it would remain open but wouldn't be surprised if it didn't.
John Mannillo, a longtime downtown developer, said that he hadn't opposed the subsidy but wished city leaders had done more to prepare for the end of the deal, such as bringing in smaller tenants to fill vacant spaces in the building.
"It's going to be hard to reuse," he said. "I'm afraid that we're going to be sitting on it for a lot longer than we'd like."
Downtown more of a draw
Downtown St. Paul may be better primed for retail success than it has been in years. According to state figures, 72,600 people worked downtown in early 2012, down slightly from an annual average of 75,100 for the previous 10 years. But city officials say that more than 8,500 people live downtown, a 28 percent increase over the last 10 years, in 7,000 housing units -- a jump of 38 percent in the last decade.
Amenities like the Central Corridor line, the new Union Depot transit hub and the Saints ballpark in Lowertown are expected to bring even more people downtown.
A new Target store was one of the favorite options mentioned Thursday to replace Macy's. "Any number of us have hinted that to Target," Kramer said.
Said Target spokesperson Erika Winkels: "At this time, Target has no plans to open a store in the Macy's building in downtown St. Paul. We remain committed to the Minneapolis-St. Paul market and will continue to pursue opportunities as they arise."
Coleman said he had no firm ideas on what might work at the site. It could be retail better scaled for a modern downtown the size of St. Paul's, he said, or a combination of retail or office space.
"I don't have a wish list of what I'd like to see go in there," he said. "I think there's all kinds of opportunities. What I do have is a list of why that site is particularly attractive to any developer that wants to come along."
Kevin Duchschere • 651-925-5035