In downtown St. Paul, a retail developer plans to buy 10 percent of the leasable space in the vacant Macy’s department store building for $2.5 million.
The St. Paul Port Authority purchased the block-length building and an adjoining parking ramp from Macy’s in January 2014 for $3 million.
The board of the St. Paul Port Authority will vote Tuesday on the sale, which is likely to pass unanimously.
“We expect this to be the first of several fun announcements throughout the spring and summer of 2015,” said Port Authority President Louie Jambois.
Retail developer NLD Wabasha will purchase 17,870 square feet on the Wabasha Street level and another 7,700 square feet along the skyway, then ready the space for a retail tenant. Port Authority officials declined to name the tenant at the developer’s request.
A call to NLD Wabasha was not returned.
“They’re still in negotiations with their tenant,” said Lee Krueger, vice president of real estate and development at the Port Authority. “The tenant is still doing the store layout, the design, that sort of thing.”
The Macy’s building spans 360,000 square feet, but two levels are below-grade and considered nonleasable, Krueger said. The adjoining parking ramp spans another 180,000 square feet.
The Port Authority purchased the site from Macy’s with the hopes of selling the building to a developer for tear-down and redevelopment, but potential buyers balked at the estimated $13 million demolition price tag. Discussions with the private sector have taken well over a year.
“We’ve been talking to everybody,” Krueger said. “Once we got together with this developer, it did take a couple of months. But it’s been a very positive experience.”
He said the Port Authority is still talking to the Minnesota Wild about a potential practice rink at the Macy’s site, which would ease demand for ice time at the Xcel Energy Center in St. Paul. The Wild are in the Stanley Cup playoffs.
“We’re still discussing with them,” Krueger said. “They just have their hands full with a few other activities right now. We have a great working relationship with them.”
Jambois, the Port Authority president, said the sale reflects the growing interest in downtown St. Paul, which has long suffered from a declining retail presence.
In recent years, a series of office buildings, warehouses and even parking ramps have been converted into upscale residential apartments, such as the Pioneer-Endicott buildings and the Rayette Lofts. City officials have long hoped that businesses will follow.
The Macy’s department store building dates back to 1963, when it first opened as a Dayton’s. Macy’s, which converted the store from a Marshall Fields in 2005, vacated the near-windowless structure and put it on the market in early 2013.
As part of the proposal that will be voted on Tuesday, the Port Authority would cover $500,000 in closing costs. Before June 28, NLD Wabasha can elect to purchase another 2,000 square feet of space at the skyway level for $196,000.
Frederick Melo can be reached at 651-228-2172. Follow him at twitter.com/FrederickMelo.
