Macy’s Inc.’s announcement earlier this month that it plans to close its downtown Spokane store by this spring as part of a series of chainwide cost-efficiency measures has raised concerns among nearby businesses about the potential negative impacts of losing the city core’s largest retailer. It also, though, has begun to stir speculation about what mix of new uses and tenants that big structure might attract and what new energy that activity will bring. 

Both Spokane-area real estate experts and downtown observers think retailers will be attracted to the bottom floors of the soon-to-be vacated, 11-story department store building. What ultimately will go into the spaces above the skywalk level—and how long it will take to fill the building at the northeast corner of Main Avenue and Wall Street—is drawing mixed opinions. 

The downtown store was listed in a press release among 40 underperforming stores the Cincinnati-based retail giant said it would shutter. While Macy’s hasn’t disclosed a specific date for the closure, company spokeswoman Betsy Nelson says the store is in the midst of a clearance closing sale that began Jan.11 and will run 8 to 12 weeks, after which the building will be marketed for sale. 

Nelson says the store currently occupies 374,000 square feet of space and employs 94 people. County records list the building’s assessed value at $6.8 million. According to Nelson, the store actively uses seven floors, with the remaining four reserved for storage. 

Dan Cantu, owner of Cantu Commercial Properties LLC, of Spokane Valley, and a longtime commercial real estate specialist here, says he thinks another large retailer likely will take over the space, and possibly very soon.  

 “Being in the heart of downtown, with the skywalk connection and several parking garages, it’s a fantastic location and excellent opportunity for retailers,” Cantu says. 

He says it wouldn’t surprise him to see another retailer occupying the space within the year.  

“We just passed the holidays, which are peak season for retail,” says Cantu. “So the timing is right, so it’s possible that interested parties could already be negotiating this spring, looking toward a summer remodel and fall occupancy.”  

While he feels the building’s lower levels are still ideal for retail, Cantu says whoever buys the building would have to decide how best to use the upper floors. 

“It depends on how many floors they’d want to use for retail, but I’d imagine they’d consider using additional upper floors for office space first,” says Cantu. 

“They’d need a remodel, of course, as it’s a dated building, but both offices and condos have been popular ideas for downtown spaces the last few years,” he says.

Having another large retailer move into the building quickly could be good news for other downtown retailers. While many seem nervous about a potential loss in foot traffic, others seem to be taking the building’s closure in stride.   

Some observers speculate that the building will take some time to fill—and might have a number of tenants.

Larry Soehren, president and CEO of Kiemle & Hagood Co., the large commercial real estate brokerage here, says he doesn’t foresee the building becoming another large department store. 

“I’ve heard that while it’s generated reasonably good traffic, Macy’s hasn’t been a very proactive retailer downtown,” says Soehren. 

“They haven’t invested much in that location over the years, and there is the opportunity here to do so much more with it,” he says. 

Soehren says even if the building were broken down into retail spaces on the lower floors and apartments on the upper floors, it could still take a few years to find tenants. 

“It depends on the type of tenant, but retail goes in cycles. If the first two or three floors were multiple retail tenants it could still possibly take three years to fill those floors to capacity,” he says. 

Soehren says the building’s size will play a big part in what potential buyers could use it for, and further difficulties lie in bringing the building up to compliance with city regulatory codes, as well as adequately breaking up spaces on each floor.

 “To me, it makes the most sense to keep the first two or three floors as retail spaces and convert the upper floors into multifamily apartments,” he says.

“I think condos would be too hard to finance in both construction and sale, there’s not enough demand for office space, and upper floor retail just isn’t viable,” concludes Soehren. 

One Spokane company viewed as possibly having an interested in buying the building is the Cowles Co., which owns the River Park Square shopping mall that’s just west of the Macy’s building and is attached to it by a second-floor skywalk. The Cowles Co. also owns The Spokesman-Review newspaper and the Journal of Business.

Bryn West, general manager of River Park Square, was quoted in a recent story in the Spokesman-Review as saying if the building is sold, River Park Square would have “some interest” in redeveloping it into a project that would include residential and commercial space.

 “Obviously it’s a great opportunity for whoever can obtain the building,” West told the Journal in a later interview. “There is a lot of potential there for a mixed-use property.”

The Cowles Co. previously remodeled the former downtown J.C. Penny building into retail space and residential condos.

Regardless of the building’s future use, Susan Connolly Carmody, owner of Jigsaw Boutique, a women’s clothing store at 601 W. Main, says she sees the continuing redevelopment of downtown as a good thing. 

“While I am greatly sorry for the store’s employees, I see a lot of the changes downtown as being really positive,” she says. 

“It’s different down here than it was years ago,” she adds. “There’s a new energy now, and people are starting to visit downtown for more than just great shopping.” 

Connolly Carmody says in the 16 years she’s been operating Jigsaw, she hasn’t noticed Macy’s investing much into the building’s upkeep. 

“That building is part of a fabulous block, right in the middle of the city. I think it’s about time it received a little TLC,” she says. 

Connolly Carmody says she sees the building being redeveloped quickly, although it might remain in flux for a couple years. 

“Ultimately, redevelopment is a part of all great cities,” she says. “I’m excited to see what’s to come.”

Visit Spokane’s president and CEO, Cheryl Kilday, had similar views on the store’s closure, saying, “Macy’s has had a long history in downtown’s retail core, and we’re sad to see it go and sorry if the closure has impacted employees and their families.” 

However, she also says the organization is optimistic about future opportunities for the space, adding that, “While we are not directly involved in the recruiting process, we’re confident that whoever fills the space will have a positive impact on our community.”

Megan Duvall, historic preservation officer for the city of Spokane and Spokane County, says the historic structure has contained several tenants over the years, and is itself a mashup of different buildings. 

“From looking at old records, I feel I have a pretty good understanding of it,” says Duvall. “Many people don’t realize it’s actually made up of three buildings.” 

Duvall says newspaper sources from a decade ago show the building’s southeast portion at Howard Street and Main was built in 1914, and is known as the Welch Building. Facing Howard, but joined internally to the Welch building is what is known as the Wraight Building, constructed in 1921 by the Culbertson Realty Co.

Duvall says eventually both buildings were purchased by The Bon Marche, a Seattle-based department store chain which first came to Spokane in 1947. 

The Bon Marche purchased the Welch building in 1952, and the Wraight building in 1966. In 1952, having bought out another department store known as The Palace, the Bon Marche was known for a time as the Bon Marche-Palace.

The third structure that makes up the complex is known as the “Annex” building and was built by The Bon Marche in 1957 in the southwest corner of the store at Wall Street and Main. The land beneath this building is owned by the Spokane Odd Fellows Temple Association, which it leased to The Bon Marche, and later Macy’s Inc. 

According to company history listed on Macy’s website, Federated Department Stores, the parent company of both The Bon and Macy’s, merged the name into The Bon-Macy’s in 2003. By 2005, it became known simply as Macy’s, although the Bon Marche logo remains on the building’s outside wall.  

Macy’s Inc. also listed among its planned closings its store in Moscow, Idaho. The retailer plans to keep its stores at NorthTown Mall and Spokane Valley Mall, as well as one in Coeur d’Alene. 

Macy’s also has store locations in Walla Walla, Kennewick, and East Wenatchee. The company said in the press release outlining its cost-cutting measures that the 40 store closures would come from a current total of 770 Macy’s stores. Including Bloomingdale’s and Bluemercury locations, it operates a total of 900 stores in 45 states. It said four of the targeted stores closed last year and the rest will close this spring.

Terry J. Lundgren, Macy’s chairman and CEO, said in the press release that the company was taking the cost-cutting measures due to disappointing 2015 sales and earnings performance. 

Macy’s won’t be releasing its 2015 fourth-quarter sales and earnings until next month, but it said in a separate press release issued earlier this month that its sales declined by close to 5 percent in November and December combined, compared with the same period in 2014. It said it expected to report earnings per diluted share in the range of $3.85 to $3.90, down from previous expectations of $4.20 to $4.30.

Lundgren said the announced cost–cutting steps the company is implementing represent more than two-thirds of its goal of reducing annual business cost by $500 million from previous planned levels by 2018.

“In some cases, there will be short-term pain as we tighten our belt and realign our resources,” he said. “But our eye is on a long-term vision of Macy’s Inc. as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace.”