Macy’s to sell top half of State Street flagship; developer plans offices there

Macy’s, Inc. has signed a deal to sell the top half of its Loop store to a developer who plans to convert the space to offices.

The company announced in a news release Wednesday that floors 8 through 14 of its State Street store in Chicago to a private real estate fund sponsored by Brookfield Asset Management. Those floors, now largely unused, would become “dynamic, creative office space,” according to a Macy’s news release.

Macy’s will receive $30 million.

The news release says the sale will “make Macy’s on State Street a more vibrant shopping destination.”

The company had announced last year that it was looking to sell the floors above its iconic Walnut Room dining area on the building’s seventh floor, calling the Walnut Room “a cherished tradition.”

The Walnut Room, on the seventh floor, was the first restaurant to be located in a department store when it opened in 1907 in what was then the Chicago-based Marshall Field’s department store.

Downtown Ald. Brendan Reilly said Macy’s decision to sell the upper floors at the iconic State Street store “sounds like good news for Macy’s and their shoppers” in Chicago.

“Most of those upper floors are largely unused today – which means the building [as a whole] has not been performing at its highest and best use. That is a real shame, considering the beauty of this building and its prime location in the Loop. This new development on the upper floors should go a long way toward adding new vibrancy and activity in and around this property,” Reilly wrote in an email to the Sun-Times.

Some shoppers fear that Macy’s decision to sell the half of the block-long store to a developer could be the beginning of the end for the State Street Store.

To many shoppers, the store has been dying a slow death ever since the Marshall Field’s name was removed. Reilly made the opposite argument.

The $30 million sale will “help Macy’s bottom line” and “fill the upper floors” with new office tenants, thus securing the store’s future on State Street, the alderman said.

“That will add value to the property as a whole and the new office density on the site will likely mean more foot traffic, more sales and, hopefully, improved business for Macy’s,” Reilly wrote.

“If all of those things do happen, this can only be good news for Macy’s, their employees and Chicago taxpayers.”

Contributing: Fran Spielman