Despite announcing a closure nearly two years ago, Macy’s has stuck with its flagship store in San Francisco, since no one wants to buy it off the rack.
The retailer announced Tuesday that it is partnering with San Francisco real estate firm TMG Partners to explore a potential redevelopment of its property at 170 O’Farrell St. — emphasis on “potential.” The Union Square location will remain open indefinitely.
Since Macy’s owns the building, any closure of the store would have to include a sale of the property, since the company would have to pay for taxes and maintenance.
TMG will help Macy’s conduct a “strategic assessment” of the property to explore the viability of renovations or reuse that “align with the needs of today’s office workers, residents, visitors, retail, and local businesses,” the retailer said.
No applications have been filed with the Planning Department. Macy’s said the partnership is in the early stages, and it will share updates on the Union Square store in the coming months.
Speaking to the San Francisco Chronicle, which first reported the agreement (opens in new tab), TMG CEO Michael Covarrubias said there are “a lot of creative things” his firm has been thinking about for the property. “Housing is important for downtown,” he noted.
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At its peak in the mid-1990s, Macy’s dominated San Francisco’s premier shopping area, spanning 1.1 million square feet across its flagship at 170 O’Farrell St., the I. Magnin Building at 90 Grant Ave., and the Macy’s Men’s store at 120 Stockton St. But since then, closures have become a regular pattern for the retailer, including 40 stores in 2015, 100 stores in 2017, and 150 last year.
Previous redevelopment efforts, including a pitch by Morgan Stanley to turn the men’s store into office space, stalled.
A spokesperson said the TMG partnership is part of Macy’s “ongoing strategy to evaluate compelling options for its real estate portfolio.”
TMG has spent the year buying properties near the Union Square store. In June, The Standard reported that the firm was in contract to buy the Metreon, a shopping center that is home to the city’s only IMAX movie theater and downtown’s only Target. A month later, TMG agreed to purchase an office building at 149 New Montgomery St.
A source said this is not the first time TMG has sniffed around Macy’s. The group was considering a pre-pandemic deal when the retailer sold two neighboring buildings in 2016 (opens in new tab) and 2019 (opens in new tab).