Sale of part of Macy’s site sets stage for more development in downtown St. Paul

MinnPost photo by Peter Callaghan
Walgreen’s, thought to be the retailer involved, has a small store across Wabasha from the Macy’s, and the chain is moving into larger and more-modern spaces as part of its national strategy.

When the St. Paul Port Authority approved the sale of a relatively small portion of the former Macy’s department store on Tuesday, it was the first official sign that something that had seemed unlikely a year ago might become reality.

The $2.5 million sale of 25,000 square feet of the old store at the corner of Wabasha and E. 6th streets not only means the building will once again house retail — but that the Port Authority might actually get out of the project without losing money.

That was not a sure thing when the authority, at the urging of St. Paul Mayor Chris Coleman, purchased the building from the department store chain in February of 2014. The purchase price was $3 million. Downtown development isn’t a normal part of the authority’s portfolio, but the deal was done to get ahead of a rumored sale to a developer who had less-than-exciting plans for the mid-century building.

Initial plans to demolish it and market the cleared site to developers fell through when the price of demolition came in at $13 million. Plan B was to see what could be done within the existing structure.

Port Authority President Louie Jambois called the sale, approved unanimously by the board, “a catalyst for the rest of the project.”

“We weren’t certain we would be able to lease the space when we bought the building and here our first transaction isn’t a tenant — short-term or long-term — our first transaction is an actual sale,” Jambois said. The port expects one more transaction, likely to a developer.

“We expect this to be the first of several fun announcements in 2015,” he said.

Tonya Tennessen, Coleman’s communications director, said the mayor was excited by news of this deal. “He sees it as critical to the vitality he wants to see in that part of downtown. The city is experiencing incredible momentum right now.”

While selling the rest of the building and the enclosed parking ramp is the authority’s preferred option, Jambois said the port is open to some type of joint development with a partner.

The port authority staff won’t confirm yet, but the retailer that is thought to be involved is Walgreen’s because the broker in the transaction with the port does extensive business with the drug store chain. Walgreen’s has a small store across Wabasha from the Macy’s, and the chain is moving into larger and more-modern spaces as part of its national strategy. A recent deal in downtown Minneapolis involving the same broker will see the existing Nicollet Mall store closed and replaced with a larger store, part of a redevelopment of the old Saks space

Tuesday’s deal also calls for the port to front the money to have the somewhat homely and windowless facade be “reskinned” with a modern curtain wall, which will include windows.

“The skin on the building is not structural so it is fairly easy to pull it off,” said Lee Krueger, the port’s senior vice president for development. The Wabasha Street side and the East 6th Street side would get what he called a “dramatic change.”

“We’d kind of like a little of a ‘wow’ factor. We’d like it to really pop,” Krueger said. The side facing Cedar Street which encloses the parking would be spruced up but the “skin” would remain. “Sixth and Wabasha is a key corner of downtown St. Paul and its important for this building as well as the rest of downtown for this to be a neat building that people will be pretty proud of.” Jambois said none of the prospective tenants wanted the facade as is.

“No one is interested in occupying that space without exposure to sunlight,” Jambois said. And what about the skyway to nowhere that ends in the air above a surface parking lot? It could stay if there is a development across the street but it could also go away, Jambois said.

There are also ongoing talks with the owners of the Minnesota Wild to have a practice ice in the building, to be used when the team is unable to use Xcel Energy Center for workouts. Krueger said that would be a relatively small part of the overall project, and that if an ice sheet is included it would have to be available to users other than the Wild, Krueger said.

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