
Macy’s closure in Downtown Sac raises both questions and opportunities for site
Source: Sacramento Business Journal
Brokers: Ken Turton
On the one hand, the pending closure of the Macy’s department store at Downtown Commons in Sacramento is a loss of a long-running retail hub and one of the anchors of that destination retail/entertainment area.
On the other, though, it means a full square block of real estate in the heart of Downtown Sacramento is likely to become available, for either re-use or a new use entirely.
“There’s definitely going to be interest,” said Ken Turton, founder and CEO of Turton Commercial Real Estate, which specializes in urban core properties. “The empty lot across the street sold for $165 a square foot, so there will be interest.”
Who that interest comes from, and what they might want to do with the property, depends on several factors, Turton said. One is the parking underneath the store at 414 K St. and who owns it. Another is whether there’s a restriction on that particular site, as part of Downtown Commons, to remain either an entertainment or retail use.
Macy’s Inc. (NYSE: M) announced Thursday it would close Downtown Sacramento’s site and 65 other underperforming stores nationwide, with sales underway this month and the permanent closure expected in the first quarter of this year.
In an email, communications representatives for Macy’s said they had no further information on any specific plan for the 447,000-square-foot Downtown Sacramento store, which opened in the 1960s.
Last summer, however, a Macy’s spokesperson acknowledged the company was considering closing the store at 414 K St. and comparing its real estate value to its future sales growth and profitability potential in its evaluation of closure locations.
Depending on the answer to the questions about parking and site restrictions, Turton said, he could see potential interest in the site for a number of possible uses, such as retail/entertainment, hospitality and housing.
Someone considering a retail or entertainment use might have to explore whether turning the four-story building into two larger floors was possible, he said, to fit the new user.
While a hotel would be a logical possibility, given the proximity to Golden 1 Center and a strong market overall for hospitality right now, the building might not be a good fit for it in its current state, he said.
Turton said he also wouldn’t rule out the possibility of a retailer coming in and backfilling the building virtually as it is, or a new owner demolishing the building entirely to do something else, if they could.
By age, the building would be eligible for the city’s list of historically significant properties, though it doesn’t appear to be on there now.
Macy’s current neighbors are likely to take a keen interest as well, Turton said. The Sacramento Kings and JMA Ventures LLC partnered with the city to develop Golden 1 Center and Downtown Commons a decade ago.
“The Kings and JMA Ventures would want to make sure it’s a complementary use,” he said, adding they may have a right of first refusal when the property comes on the market. Messages left Thursday afternoon with the Kings and JMA Ventures about their interest in the Macy’s site weren’t immediately returned.