Potential Buyers Line Up for Macy’s SF Union Square Store

With Macy’s slated to close its 400,000-square-foot department store in San Francisco’s Union Square, TMG Partners and Prado Group each have a shot at buying it.

The locally based developers are among potential buyers who have expressed “strong interest” in redeveloping the nearly block-size store at 170 O’Farrell Street, the San Francisco Chronicle reported.

In February, the New York-based retailer announced it was putting the store that opened in 1947 up for sale for an undisclosed price. Eastdill Secured has the listing.

The Downtown Macy’s availability stems from the pending closure of 150 underperforming stores to boost sales and shift the company toward selling luxury goods. The store will stay open until Macy’s finds a buyer.

Possible future uses of the connected Macy’s buildings include retail, a hotel and housing.

An unidentified spokesperson for TMG confirmed the firm is among a “few different entities” in huddles with Eastdil, but said conversations were “still early,” according to the Chronicle.

Dan Safier, head of Prado Group, declined to comment on “ongoing negotiations.”

Last month, an unidentified spokesperson for Macy’s said the retailer was still exploring its options for the property.

Emails obtained by the Chronicle show city officials have expressed the city’s willingness to partner with the retailer and developers, while pushing for Macy’s to keep a presence in its redevelopment.

“It is the city’s hope that the Macy’s store can be successfully retained on the site,” Sarah Dennis Phillips, executive director of the Office of Economic and Workforce Development, said in an email earlier this year.

A second-best option, she said, would be that another retailer occupy the retail store before and during its redevelopment, including restaurants.

Phillips said the city could offer developers incentives, including height and bulk exemptions, allowable use expansions, tax increment financing, tax incentives and development agreements.

While housing and a hotel would be permissible, a hotel would require a conditional use permit. With parts of the property affected by historic preservation rules, the height could be limited because of potential shadows across Union Square, according to the Chronicle.

Macy’s, which owns Bloomingdale’s and Bluemercury, could move its San Francisco Bloomingdale’s store, located in the half-vacant former Westfield Mall near Union Square, into its flagship complex. Macy’s declined to confirm a move.

TMG and Prado have been major investors on both sides of the bay. While TMG owns PG&E’s new Oakland headquarters at Lake Merritt, Prado is working to convert the former California Pacific Medical Center in Presidio Heights into housing at 3700 California Street.

— Dana Bartholomew