'Most important block in the city:' What's next for Macy's site Downtown

Just as Cincinnati grabs for Amazon's coveted second headquarters and a big-league soccer team to cap a decade-long economic rebound, Macy's dealt the city a setback: it will close its store across from Fountain Square at the heart of the Downtown.

Wednesday's disclosure came as little surprise, but its impact was immediate.

"This is a huge psychological blow for Downtown," said Jeffrey McClorey, the owner of Bromwell's on Fourth Street, noting the large space that will become vacant right on Fountain Square. He also expressed concern it could set off a "chain reaction" exodus of other prominent anchor retailers, such as Saks and Tiffany's.

Arn Bortz, a principal with Towne Properties, the Mount Adams-based real estate developer that is part of the group that leased the space to Macy's, said the group would work to fill the cornerstone site.

"We don't have a definite plan but we view this as an opportunity to redefine the future for the most important block in the city," Bortz told The Enquirer. "We have every intention of taking full advantage of that opportunity."

Meanwhile, officials involved in courting Amazon's planned second headquarters, disclosed the Macy's Downtown site (the entire building footprint) was included in the region’s Amazon H2 bid, a source close to the process told Enquirer political columnist Jason Williams.

More: Macy's closing Downtown store: What we know

Future potential reaches skyward

What happens next at the site will be up to a complex set of owners: the city owns the land; four real estate interests (Towne Properties, Belvedere Corp., Duke Realty, and Madison Marquette) and a group of pension funds own the 225,000-square-foot building; and Fifth Third Bank owns the air rights above the structure.

Bortz believes the ground floor could remain retail space, but the second, third and future floors above it could be developed as offices, apartments, condos, hotel rooms or some combination.

Officials courting Amazon haven't clued in the building's owners, Bortz added.

"I don't know a thing about Amazon and I'm not aware of any communication between Amazon and our partnership," Bortz said.

Whether the Downtown site eventually wins the coveted second headquarters of Amazon or mix of new retail, office and residential, Macy's departure will still deliver at least a short-term hit.

More: Downtown Macy's site: These are the decision-makers

Short-term impact felt on the street

Chuck Hellman, who just last fall opened Hellman Clothiers on Race Street south of Macy's, between Fourth and Fifth Streets, said Macy's leaving downtown could be a momentum killer.

"I certainly want to see it (Macy's) replaced, whether it's a competitor of mine or somebody else, because it brings people to the Downtown area," Hellman said.

Jim Elkus, who owns Bolero Menswear on Vine Street just south of Macy’s, said he’s more concerned about Downtown’s image as a result of Macy’s pending departure rather than the impact on foot traffic.

“Retail is just not doing well Downtown; that will be people’s first impression,’’ Elkus said. “The specialty stores like myself have developed a different type of customer that likes to come to us because we’re local, and we know our product and service.’’

The Booksellers owner Neil Van Uum said the bookstore could ultimately benefit from Macy’s departure if the department store is replaced with a new tenant with big-draw potential, such as a movie theater or even a bowling alley.

“I travel all over the country, and I see all sorts of entertainment happening along with restaurants and retail,’’ Van Uum said. “We would love to see something that was more entertainment-oriented.’’

City and economic development officials said the setback wouldn't stop Downtown's momentum.

More: Losing Macy's opens new opportunities for Downtown

Local leaders look ahead

Mayor John Cranley expressed confidence the site would not remain vacant.

"Downtown's vibrancy will quickly re-tenant Macy's retail space. We consider Macy's long-term success to be very important since their headquarters and hundreds of jobs are Downtown," Cranley said.

David Ginsburg, president of Downtown Cincinnati Inc., called the closure "the end of an era," but also said the site will be a strong draw for other tenants.

"It's the No. 1 location Downtown – it's a great address and it will come to some higher and better use," Ginsburg said.

Ginsburg noted the store, which opened in 1997 as a Lazarus (a defunct regional department store nameplate operated by Macy's), was an early marker of Downtown's upswing.

In the last decade, Downtown has added 390 shops or restaurants, 980 hotel rooms and more than 5,400 residential units, according to DCI.

"Downtown wasn't seen as safe, clean or vibrant – it was a reaffirmation that the store had a future and it was a great anchor," Ginsburg recalled.

Officials with the Cincinnati Center City Development Corp. (3CDC) acknowledged the blow, but also expressed faith.

"You hate to see a shop like that close up, but we're optimistic long-term with the vibrancy we've created Downtown," said Joe Rudemiller, a spokesman for 3CDC, which manages activities and the parking at Fountain Square.

The closure comes after years of a retail and residential rebound had taken hold in Downtown with a wave of new restaurants, apartments and condos and even hotels opening in the last decade.

Retailer has been cutting back

Official word of the closure comes toward the end of Macy's fiscal year when it typically releases a list of planned store closures and outlines other plans for new locations. Last year, it said 100 stores would close and it listed 68 that would close by summertime.

Macy's said the remaining 32 stores would come in "the next few years as leases or operating covenants expire." On Wednesday, Macy's confirmed the Downtown store with a lease expiring this month would be cut.

"After careful consideration, Macy’s has decided to close the Fountain Place store in Cincinnati," the company said. It did not immediately provide the timing of the closure. But clearance sales typically begin immediately and stores are closed within a matter of weeks when Macy's announces a store closing.

Macy's has been trimming its store portfolio in recent years to appease investors who fear it has too many locations and too much money invested in real estate. So far, it has cut back underperforming stores as well as sold all or parts of flagship locations to generate cash.

Macy's said it had informed store associates Wednesday and will work to place them at other nearby stores or provide severance to eligible employees.

"While closing a store is always a difficult decision because of the impact on our customers, our associates and the community," the company said. "We deeply appreciate the loyalty of our customers and associates and remain committed to the greater Cincinnati area."

Macy's will continue to operate six other locations in the region, including Macy’s Anderson Town Center, Kenwood Furniture, Kenwood Towne Centre, Northgate Mall, Tri-County Mall, Florence Mall and at macys.com and on the Macy's app.

Still, Naomi Ruben, an administrative assistant who works Downtown, said losing Macy's would leave shoppers like her with limited nearby options.

After T.J. Maxx on Fourth Street closed, the nearby retail left won’t cater to workers like her, she said.

“We have enough restaurants. We need some other kind of retail of some sort,” Ruben said. “A lot of people come downtown to work. I ride the bus. I’m not sure how many people are going to be at Saks.”

On the morning of the announcement, the Fountain Square store was largely empty and quiet with few customers to speak of, and a handful of staff was stationed at a couple check-out stands and beauty counters.

Macy's has been trying jumpstart sales growth in the past two years as consumers have cut back or eschewed malls.

Macy's stock has rallied since mid November amid growing optimism for a strong Christmas shopping season as the economy has strengthened and amid the run-up to passage of the Republican tax cut last month. The company has not disclosed how it did at Christmas.

Jason Williams, Cameron Knight, Carrie Cochran and Monroe Trombly contributed.