With large chunks of office space difficult to find, Macy's is offering for lease several office floors in the Nicollet Mall building that also houses its department store.

The only problem is that in this economy, large office tenants aren't easy to find, either.

Jim Damiani, whose Bloomington-based Welsh Companies has been hired to lease the 350,000 square feet in the building, said the shortage of large blocks of space could prove to be an advantage in marketing the space in the downtown landmark.

But Damiani said the vacant space also could be divided up and leased to several smaller tenants if a large user can't be found. Area industry experts said Thursday that's a more likely scenario, pointing out that the dearth of large tenants is one of the major reasons no new downtown office towers have been built for several years.

The space has been vacant for several months, since Macy's closed its Minneapolis division headquarters following a reorganization that saw Macy's North folded into Macy's East division, based in New York. The reorganization resulted in layoffs of about 950 employees in Minneapolis.

Damiani, a senior vice president at Welsh, said the vacant office space is on the sixth through 10th floors. All of the floors are completely open except the eighth floor, which will continue to house Macy's auditorium, where the retailer hosts special events such as its holiday display, he said.

The leasing of the office space won't affect the department store, which will continue to occupy the first five floors, or the restaurants on the 12th floor. Macy's will continue to have office space on the 11th floor for about 150 employees.

Completed in 1902, the building at Seventh Street and Nicollet is best known as the home of Dayton's department store. The name was changed to Marshall Field's in 2001, about 10 years after Dayton Hudson Corp. acquired Field's. The name changed to Macy's in 2006. The office space always has been occupied by whichever department store has operated in the building.

The space is coming onto the market at a time when overall demand is extremely weak. The most recent figures available from the Twin Cities office of Colliers Turley Martin Tucker put the vacancy rate for downtown office space at 15.9 percent as of the first quarter. The vacancy rate for Class B space, like that in the Macy's building, was 20 percent. The last year has seen more office space, including sub-leased space, come onto the market as companies move out or cut back.

Some area industry experts are skeptical that a major tenant could be found for that much office space. Most major office tenants in downtown Minneapolis currently aren't in the market for more space.

Damiani said he believes the building's prime location could help attract a variety of tenants, even though the weak economy has put a large amount of vacant office space on the market in the last year. "The bones of the building are terrific," he said. "It's in very good shape."

He said that if a tenant took a large amount of space, a separate elevator for that user could be built in the first floor area that formerly housed the J.B. Hudson jewelry store. Otherwise, smaller tenants could get separate elevator access through the attached parking ramp, he said.

Damiani also said that because the building was constructed in stages, space on each floor ranges from 58,000 to 91,000 square feet, allowing a variety of potential users to lease an entire floor.

Brent Erickson, a vice president at Bloomington-based NorthMarq Real Estate Services, said it makes sense for Macy's to try to lease the space, even in a difficult market. "Whatever they are able to get in rental revenue will help with their carrying costs of the property," he said.

Susan Feyder • 612-673-1723