Is It Closing Time For Macy’s?
Editor’s Note: This piece ran in the December 2016 issue of Twin Cities Business. On December 1, after the issue was on shelves, TCB broke the news that the Macy’s would close its Nicollet Mall location, citing several anonymous city officials. That story can be read here.
Cincinnati-based Macy’s Inc. announced plans in August to close about 100 as-yet-unidentified stores due to declining sales. Media speculation ramped up in October that downtown Minneapolis might be one of those stores.
Last year the retailer announced “an intensification of focus in our Top 150 stores.” Macy’s ranking of those stores surfaced in a Cincinnati business newspaper. Three local outposts are listed: Southdale, Mall of America and Ridgedale—but not downtown Minneapolis. A Macy’s representative declined comment on plans for downtown Minneapolis.
Since 2013, Macy’s has closed downtown stores in St. Paul, Pittsburgh, St. Louis, Houston, Honolulu and Spokane. Many were one-time “flagship” locations of former brands merged into Macy’s. The key question may be: Is downtown Minneapolis more like Pittsburgh or Seattle?
Macy’s closed the former Kaufmann’s flagship in downtown Pittsburgh in 2015, selling it off for redevelopment. In downtown Seattle, Macy’s sold the top four floors the former Bon MarchÃ© store for $65 million; a smaller store will remain at the property. In Brooklyn, Macy’s is redeveloping a renovated four-story store in its nine-story building; a real estate partner will develop office space in the remainder of the site.
One veteran retail real estate broker thinks that the downtown Minneapolis store will survive in a scaled-down format. “The whole problem with this location has always been that it’s not sized right,” says Andrea Christenson, a vice president with Bloomington-based Cushman & Wakefield/NorthMarq. “I think they’ll downsize to two or three floors.”
In November 2015, Macy’s named the former Dayton’s in downtown Minneapolis among a handful of “flagship” properties where the company would pursue redevelopment partners for projects that would retain a “robust Macy’s retail presence while also bringing alternative use into those buildings.”
In 2015, reports indicated that Chicago-based Sterling Bay Capital would buy the office space above the store, but no deal materialized. Privately, some real estate pros grumble that Macy’s ongoing indecision about the Minneapolis site has been a stumbling block. In the interim, Macy’s financial performance has deteriorated, leading to speculation it may have less patience for putting together creative real estate deals.
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Last year, New York-based analytics firm 1010data crunched consumer data to estimate cities where Macy’s has lost the most market share. Minneapolis was not among the 10 biggest losers, which included Milwaukee, Pittsburgh, Philadelphia and Detroit.