St. Paul Macy's store slated for sale to urban developer

A San Francisco-based real estate developer is negotiating to buy Macy's vacant downtown St. Paul store, which has been on the market since its doors closed in March.

According to e-mails and documents requested by the Star Tribune from the city of St. Paul under the Minnesota Data Practices Act, City Center Realty Partners (CCRP) is the likely purchaser of the five-story, 362,000-square-foot building, which was built in 1963 by Dayton's and is owned by Macy's.

Sigurd Anderson, a founding partner of CCRP, wrote to a city economic development official in mid-August indicating that Macy's had asked him to contact St. Paul Mayor Chris Coleman, "as we are the buyer of the building."

It's unclear how CCRP will redevelop the former Macy's. Representatives from the firm did not respond to calls and e-mails from the Star Tribune.

Coleman has said he generally doesn't favor retail use for the building. He said last spring he'd like to see it torn down and replaced with an office building that includes first- and second-floor amenities extending the city's bar and restaurant offerings.

In an e-mail a few weeks ago, St. Paul Planning and Economic Development Director Cecile Bedor said the city hoped for a mixed-use development that could include housing. Yet officials feared the worst: a "Burlington Coat Factory"-type of retailer, according to one e-mail.

City officials declined Wednesday to address CCRP's plans. Mayoral spokesman Joe Campbell said that "the city continues to work with [CCRP] and Macy's to make sure we have something on that site that brings more vitality to downtown St. Paul."

Matt Kramer, president of the St. Paul Area Chamber of Commerce, said that a sale only six months after Macy's closed is testimony to the growing strength of the downtown market and the potential of the building itself.

"It was a one-tenant building, so whoever buys it essentially gets it free and clear," Kramer said. "And the sheer size of the building lends itself to bold thinking."

CCRP has extensive experience buying and developing urban projects, and the list of retailers it has worked with on these developments is similarly broad, ranging from Denny's to Ralph Lauren.

"The kind of retail that will work [at the Macy's site] will serve people who work downtown and live downtown," said David Brennan, a marketing professor and co-director of the Institute for Retailing Excellence at the University of St. Thomas. "It is highly unlikely retail at that spot will draw people from beyond the downtown core."

The Macy's purchase, which hasn't yet closed, would be CCRP's fourth purchase in the Twin Cities real estate market in recent years. One of its properties is the Tractor Works building in Minneapolis' North Loop, home to the Be'wiched deli, Bar La Grassa, a fitness center and office space. CCRP recently bought the 320,000-square-foot Plaza Seven office building on nearby Nicollet Mall.

The Macy's in St. Paul had other suitors, several e-mails suggest, although it's unclear whether they made formal offers.

A representative for Ted Bigos, founder of Golden Valley-based Bigos Management Inc., contacted the city on Aug. 21 indicating that the firm may be interested in tearing down the building and turning the site into housing and parking.

Bigos owns and manages 42 apartment communities in the Twin Cities and Duluth, including Kellogg Square, Galtier Towers, Lowertown Lofts and Mears Park Place in downtown St. Paul.

In addition, California-based developer John Fransen wrote to the city suggesting the site could attract a "major retailer not currently in [Minnesota]." Subsequent missives indicate the retailer to be Nordstrom, the upscale department store currently at the Mall of America and, soon, Ridgedale.

CCRP didn't pop up in the city's inbox until Aug. 1, when a mayoral aide reported that Sigurd Anderson had called and said he wanted to speak to Coleman about Macy's. Anderson apparently didn't talk to city officials until 11 days later, when Bedor — who went to college with Anderson — called him back.

"We were thinking about putting together a number high enough so that if we got beat, it would more than likely be an entity that would do good things for that block," Jambois said Wednesday.

But the Port Authority never got a chance to make an offer. Four days after the meeting, Anderson was identifying CCRP as "the buyer."

Since then, city officials have given him information on the parking lot property across Wabasha Street from Macy's and responded to Eric Anderson's queries about the city-funded asbestos removal done at Macy's in the early 2000s.

That $1.5 million grant was made to Target Corp. in 2001, along with a $6.3 million city loan to subsidize the store's $20.4 million renovation. The city agreed to forgive the loan if the store remained open for 10 years.

Once that period was up, at the end of December 2012, Macy's announced that the St. Paul store — typically a sluggish retail performer — was closing.