A historic former Dayton’s department store will anchor a 1.2 million-square-foot mixed-use development

By: Beth Mattson-Teig

The new owners of the former Macy’s store in the heart of Minneapolis are at work on an ambitions transformation of that century-old building into a 1.2 million-square-foot office and retail destination.  The stakes are high for this redevelopment, given its size, historic significance and prominent position on Nicollet Mall, the 12-block portion of Nicollet Avenue that forms the central business district’s main pedestrian and transit venue.  Some call this the Dayton’s Project—in a nostalgic glance back to the building’s early 20th century origins as a Dayton’s department store.

“This is ground zero for a big initiative that the city has committed to in changing Nicollet Mall,” said Don Kohlenberger, founder and head of Minnetonka, Minn.—based Hightower Initiatives, the development consultant firm managing the construction.  The property’s owners are New York City—based 601W Cos., Chicago—based Telos Group and Bloomington, Minn.—based United Properties.

Last year the city completed some $50 million in improvements to the Nicollet Mall stretch, including the addition of public artworks and the upgrading of building entrances.  The property owners involved in the Dayton’s Project, for their part, have made a sizable financial commitment of their own: They acquired the property from Macy’s last March for $59 million, and the redevelopment is expected to come to roughly $190 million, for a total cost of about $250 million.

The project provides a rare opportunity involving a big block of empty space in a prime location, says Tricia Pitchford, senior vice president of leasing at Mid-America Real Estate (Minnesota), who is leasing agent on the redevelopment’s retail portion.  The existing property fronts a prime section along Nicollet Mall between 7th and 8th streets.

Retail, restaurants and a food hall will anchor the project’s first three floors— the lower, street and skyway levels—and the upper floors will be converted to office space, with the inclusion of a fitness center, a conference center, an open-air deck and an enclosed, all-season rooftop lounge.  Tentatively speaking, the retail space, food hall and restaurants are likely to occupy about 200,000 to 250,000 square feet, and the office and services spaces will account for about 700,000 square feet.

The stakeholders are mindful that this property is a landmark of great sentimental value for Minnesotans.  George Dayton opened his first retail venture here in 1902, as Dayton’s Dry Goods.  This would become the first of the Dayton Co.’s chain of Dayton’s department stores.  The name of the store changed several times over the years through mergers and consolidations, with stints variously as Dayton-Hudson, Marshall Field’s and finally, Macy’s.

People have fond memories of shopping at the store and seeing the elaborate annual holiday display, says Kohlenberger.  “There is emotional ownership by the people of Minnesota, and that carries with it a big responsibility for us to get the design right,” he said.  George Dayton would go on to build one of the first enclosed malls in the country: Southdale Center, in suburban Minneapolis in 1956.  He also launched the Target discount department store chain in the 1960’s.  His great-grandson Mark Dayton is currently governor of Minnesota.

The original building underwent several additions and modifications over the years, with most of the expansion occurring between 1917 and 1963.  The current structure comprises the basement level and 12 upper floors.  The Macy’s store, which closed in March after completion of the sale, had occupied the first five floors and operated the Oak Grill restaurant on the 12th floor, while the remainder of the space went for offices, storage space and other uses.

Wherever possible, the developers are working to preserve historic parts of the building, such as the art deco in the fourth-floor ladies restroom and the ornate stone-and-metal archway leading to the former JB Hudson Jewelers store.  “One of the overarching design goals is to bring scaled amenities, natural light and green spaces to a new scene on the Nicollet Mall,” said Steve Bieringer, senior design manager at Gensler, the project’s architect and interior designer.  “We have a vision that will have visitors feeling like they have been somewhere truly special in the hub of the city.”

The heart of the project is to be the food hall, which inhabits the basement and street levels.  There will be a mix of food-and-beverage, restaurants and stores on the street and skyway levels.  “Everything we are doing is focused around the experience, whether it be food or retail,” said Pitchford.

One notable design feature is the removal of a portion of each floor to create atrium space between the street and skyway levels, and also from the street level down to the lower level.  The skyway and indoor walkways connect dozens of buildings in the Minneapolis central business district, and people walking along these will have a visual sight line to the lower level.  “We see that as a huge benefit to the project,” said Pitchford.  “We want to capture those people coming through the skyways, as well as those that are walking along Nicollet Mall, and have them visually drawn to the whole project.”

The idea is to provide something different from what consumers find at the local suburban shopping center, says Pitchford, including the physical stores of formerly online-only retailers, or apparel retailers offering custom-fitting.  “There is a whole new group of retailers who are understanding that business has to change,” she said, “and those are the retailers we are going after.” ■