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Requiem for a department store, not a downtown

This article first appeared in the St. Louis Beacon, July 1, 2013 - St. Louis Mayor Francis Slay has a simple question to people trying to draw complicated conclusions from Macy’s impending departure from downtown St. Louis: When was the last time you shopped there?

"Whatever void there might be — and I would contend that it’s not that big of a void — it’s more of lost memories, of something in past," Slay said. "If you look around the country, downtown department stores just aren’t surviving. The retail industry is changing dramatically."

Indeed, Macy’s decision to shut down in August its store in the Railway Exchange Building downtown sparked a flurry of commentary — but not necessarily about the state of downtown.

Downtown’s boosters point to a proliferation of "boutiques" and restaurants, a nod to the area’s growing residential character, as projects showcasing the area’s strength — especially as the economy improves.

Some observers see the decision to close Macy's as evidence of the difficulties faced by department stores. Some were surprised that the store managed to hang on for so long.

Still even if Macy's closing isn't a death knell for downtown, that doesn’t mean that filling the massive Railway Exchange Building will be easy.

The St. Louis Business Journal reported in June that one possibility is to convert some of the space into one of the biggest data centers in the Midwest. The publication reported that the data center would take up the first 10 floors of the building under a plan still in its very early stages.

Still, others say it may be some time before anything will fill Macy’s void.

"I honestly think it’s going to be empty for a long time. I hate to be negative. That’s why I’m very stressed about Macy’s closing up shop," said Frank De Graaf, a Downtown resident who runs the blog Count on Downtown. "I know a lot of the brokers downtown and people who are trying to get retail. It is already very, very hard to get retail to come to downtown."

End of an era

For decades, the Railway Exchange Building was the flagship store for what used to be Famous-Barr. Some variation of the store had been located downtown since 1924, and at one point it spread over seven floors of the Railway Exchange Building.

After Famous became Macy’s, the store continued to contract. According to a press release, the store currently takes up 189,000 square feet of space with a workforce of 94 associates. That's a fraction of the roughly 1.2 million square feet of interior space offered by the Railway Exchange Building.

In a statement, Peter Sachse, Macy’s chief stores officer, said in May that the retailer "worked hard to reinvigorate our downtown business, including remodeling, downsizing and re-focusing the store in 2011.

"But unfortunately, the level of customer activity we see no longer justifies keeping the store open,” Sachse said. “We respect the rich history of this store and the historic significance of the Railway Exchange Building. We are committed to working closely with RNY-LLC, the building’s owner, on an orderly transition of our space to a new use."

Many long-time observers – and ordinary residents – said the closure was inevitable, especially since the store didn’t substantially improve after it became smaller.

Zack Boyers — the CEO and president of U.S. Bancorp Community Development Corp. — said he was involved in getting new market tax credits for the Railway Exchange Building. That credit is aimed at luring commercial development to traditionally distressed areas.

In his view, "Macy’s in that space had long ago really left."

"The reality is, anybody who’s been in there over the past 10 years knows that it really was not a driving force for activity in the neighborhood and in downtown," he said. "So, I think it left a long time ago. It’s just making it official."

Michael Allen, the director of the Preservation Research Office, said the store also didn’t make much effort to cater to urban professionals who either began to live or work downtown.

"Macy’s had a golden opportunity to reinvent the store. But instead they just simply shrank it. They didn’t reinvent it. They didn’t fill it with the kind of merchandise that young professionals might seek to buy at the end of their lunch hours," said Allen.

Had more been done besides downsizing, De Graaf said, the store may have been able to stay alive. Instead, he said, "it became even less attractive."

"When I was walking through the store the day after it re-opened, I was like 'they didn’t do anything.' There was no renovation done whatsoever," he said. "Maybe a few new carpets here and there and maybe a lick of paint. But that was about it. Most people understood at that point that this was not going to be a long-term solution."

Emma Klues works downtown at the Elasticity marketing firm. She said, "There wasn’t anything notable that made me go tell anyone" about the store when it got smaller.

"I didn’t have a bad experience, per se. It was a little bit sad just in the sense that it was kind of empty," Klues said.

New world order for retail?

Macy’s departure may say more about how big retailers are becoming rarer and rarer in downtown settings.

"If you look around the country, downtown department stores just aren’t surviving," Slay said. "The retail industry is changing dramatically. And what we’re seeing in downtown now is a lot more boutique."

David Overfelt, the president of the Missouri Retailers Association, said in an interview that stores typically set up in areas with plenty of consumers eager to spend money. And sometimes, downtowns don’t fit into that category.

"It just depends on the demographics,” he added. “If you’ve got a large population downtown that has the economic demographic ability to shop there, then — yeah — they’re going to be there. Just go to downtown Chicago. There are stores all over the place. And Minneapolis is a pretty good example, too. But it just depends on how many people with the wallet are… for those types of stores to exist.”

Both Allen and Overfelt noted that other department stores — such as Dillard’s — closed up shop a long time ago. St. Louis Center, a mall, closed up years ago, and that failure, he said, was especially hard on Macy's since the two facilities were connected.

"The demographics have changed for that type of store in the way St. Louis has developed over the past three decades. That probably has a lot to do with it," Overfelt said. "It’s always kind of a sad thing. When you’ve had a store there for so long and it’s a flagship for downtown St. Louis. But it’s also economic reality at the same time."

'Dreaming' about what's next

Macy's departure sparked plenty of speculation — and outright fantasizing -— about what could fill the space at the Railway Exchange Building.

Some respondents to a Public Insight Network query had some ideas of how to fill the space.

Klues, for instance, suggested that "businesses coming in would do well to ask people who are here what they want or need." She said they should look to places such as the Mercantile Exchange, which is quickly becoming an entertainment and dining hub.

"Maybe a big Macy's wasn't viable, but expanding something like the Collective at MX is an option to bring more small businesses and unique shops downtown," Klues said. "I would also love to see more incubators and co-working centers crop up, like Lab1500 and the T-REx/Capital Innovators program. Let's get an artist collective or a nonprofit hub or any number of other types of communities to locate here.”

Michael Woolfork, a Berkeley resident who works downtown, suggested that a Target might be a good replacement for Macy’s. De Graaf concurred that such a structure would be "awesome."

Boyers said that he expects that the space could be used for many purposes, especially since the building is in a prime location.

"I do believe that there’s a will on the part of private sector developers, certainly private capital providers like U.S. Bank that are working in partnership with our public leadership, to get something done there," Boyers said. "I’m interested in thinking about that building from a mixed-use perspective. It’s too big for one use only."

He said, he’s interested in working with "institutional" users, including universities.

"Think about what Saint Louis University’s doing in that law school. And think about how we partner with anchor institutions to put life into a building like that," he said. "There’s a great opportunity to do it. The dust has to settle for a half a second first."

But Allen and others say that filling Macy’s void could be difficult, simply because the Railway Exchange is so big.

"That building is a very difficult building to develop because of the huge size of its floor plates," Allen said. 

Slay said that organizations and developers are looking at how to the fill the space.

"Part of the discussion is ‘OK, what now?’ Once Macy’s moves out of the building, what can we use it for?'" Slay said. "When you look at the 150 vacant buildings we had in downtown, people were wondering the same thing 10 years ago.

"If you look, you’ve seen that the market and the creative developers have really stepped in with property owners to fill those buildings and to take buildings built for another purpose and another use at a different time and recreate them and transform them into something that’s real positive for today’s needs," he added. "And that’s what’s going to happen. That will happen in that building."

Jason is the politics correspondent for St. Louis Public Radio.

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