St. Paul Port Authority to buy downtown Macy's, but for what?

After months of uncertainty, the vacant Macy's store in downtown St. Paul finally has a buyer. But what will become of the boxy, nearly windowless former department store remains to be seen.

The St. Paul Port Authority confirmed Tuesday that it intends to buy the site from the Cincinnati-based retailer for $3 million with funds gleaned from a city bond issue.

Assuming the authority's Board of Commissioners approves the purchase in coming weeks, a Jan. 29 closing is scheduled.

Port Authority President Louis Jambois said it will take some time to determine the best use for the 500,000-square-foot, six-story building and its adjacent 550-space parking deck — and one prospect could involve demolition. Any reuse must be market-driven, he added.

"We won't attempt to engineer a market for this space," Jambois said.

Two previous deals to buy the 50-year-old store, which closed for good in March 2013, reportedly fell through, although it's unclear why.

With news of the sale, speculation about the future of the former Dayton's store has begun in earnest.

In recent months, Coleman has said he'd like to see the site replaced with a Class A office building that includes first- and second-floor amenities that would tie in to the downtown bar and restaurant scene.

The mayor has his doubts about reusing the building for retail, at least on a large scale. Macy's struggled for years at the site, as department stores fell out of favor with shoppers across the country.

Still, there's been talk about adding boutique-style shops on the building's lower two levels or a general retailer to supply downtown workers and residents with everyday items.

One prospect frequently mentioned on wish lists is a smaller, downtown-scaled Target store, much like the one in downtown Minneapolis.

When asked if that's a possibility, Target spokeswoman Anne Christensen said, "St. Paul is a great market for Target, and we continue to pursue opportunities to serve guests there." But the Minneapolis-based retailer said there's "no information to share about a potential new store in downtown St. Paul."

"I think you're looking at a pretty difficult project if it involves retail beyond convenience [outlets] and restaurants," said David Brennan, a marketing professor and co-director of the Institute for Retailing Excellence at the University of St. Thomas.

The Port Authority, a development agency that operates independently of the city and that typically turns old industrial sites into business parks, has often worked with the city to guide development. When the city was strapped for cash to buy the downtown site it wanted for the new St. Paul Saints ballpark, the authority bought the site and swapped it with the city for old Midway Stadium, which will become part of a business park.

The authority first got involved with Macy's last summer when city officials feared they would get a buyer they wouldn't like for the site. They met to discuss a pre-emptive purchase of Macy's by the authority for $3.2 million, using bond sales proceeds. But four days after the meeting, a San Francisco-based developer submitted a bid and was identified as "the buyer."

Commercial real estate experts say any redevelopment likely will be driven by a motivated user — either a corporate entity in need of office space or a developer with established relationships with retailers or restaurateurs looking to expand.

"It could be a good place for Class A office if they could find a decent tenant," said Herb Tousley, director of the Shenehon Center for Real Estate at the University of St. Thomas. "I suppose there are intriguing possibilities," he said, but the overall project will be challenging.

Whatever development goes there, Thune said, it ought to emerge after soliciting public input. For instance, a downtown business owner has suggested that part of the site be used as a Mall of Museums, providing a single home for the myriad small museums in the Twin Cities area.

Last spring, Coleman announced that he had asked Ecolab CEO Doug Baker and Greater MSP head Michael Langley to lead a task force on the best uses for vacant downtown sites, including Macy's. The task force has yet to return any recommendations.

Baker said in a statement Tuesday that the "Port Authority's efforts to acquire and redevelop the Macy's property will further strengthen the long-term vitality of St. Paul."

St. Paul Chamber of Commerce President Matt Kramer said that he supports the Port Authority's purchase but that he thinks the store should be demolished.

"I think there are maybe nine windows in the whole building; the sooner the building is torn down, the better," Kramer said.

"We need to be really upfront about what we, the city, are willing to put into it, because, frankly, the coffers are kind of bare," he said. "We've got other priorities, too."

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