Macy's customers could soon live inside this iconic flagship store

Macy's has faced its fair share of struggles, experiencing years of declining sales that have forced the historic retailer to close dozens of stores and lay off hundreds of corporate and retail employees.

Once the leader of American department stores, the company has spent the past decade shrinking its footprint and rethinking its future in the ever-evolving retail landscape.

While many nostalgic locations have disappeared from local communities, Macy's now appears to be taking back the closure of one of its most iconic locations nationwide.

This unexpected decision marks a surprising twist in the company's ongoing transformation strategy and could even open the door for customers to live inside one of its most famous properties.

In early 2024, Macy's unveiled its "Bold New Chapter" strategy, a plan to shutter around 150 underperforming stores by 2026 while focusing investments on its remaining 350 stronger locations. The company's growth ambitions now center on its more profitable, higher-end divisions, such as Bloomingdale's and Bluemercury.

Over the past decade, Macy's has already closed more than a third of its stores, along with a distribution center and two third-party logistics facilities. Among those slated for closure was the Macy's Union Square Flagship, an approximately 400,000-square-foot shopping institution that has served San Francisco for nearly a century.

Macy's opened its San Francisco flagship in 1945, following its acquisition of the site from O'Connor Moffatt Co., which first launched the store in 1929. For generations, the building has been both a retail destination and a local landmark.

"As someone who grew up in San Francisco, Macy's has always meant a lot to the people of this city," said Former San Francisco Mayor London Breed in a statement at the time.

"It's where families came to shop for the holidays. It's where many people from my community got their first jobs, or even held jobs for decades. It's hard to think of Macy's not being part of our city anymore."Macy's rethinks the closure of its Union Square location in San Francisco.Shutterstock

Macy's weighs development options for Union Square San Francisco flagship

Now, it seems Macy's (M) is having second thoughts, or perhaps the property has proven too valuable to sell.

The company has partnered with the real estate firm TMG Partners to explore new development options for the Union Square site as part of a broader evaluation of its real estate portfolio.

For now, the flagship location will remain open, with Macy's planning to continue operations through at least the first quarter of 2026. That window will give both companies time to assess future uses for the property.

Story continues

"This venture with Macy's is a great opportunity to carefully analyze the many options that can take the property to the next level," said TMG Partners CEO Michael Covarrubias in a statement to SFGATE. "We foresee something very experiential, exciting and bringing together a mix of uses."

While no definite plans have been announced, TMG has hinted that housing, office space, institutional facilities, and even new retail concepts could be part of the building's next chapter.

Macy's sits on lucrative real estate

While these ongoing mall closures across the U.S. mark the potential end of an era, Macy's extensive real estate portfolio may prove its most valuable asset.

Projections suggest that up to 87% of large shopping malls could close over the next decade. Between 2017 and 2022, an average of 1,170 malls shut down each year, more than double the average annual rate between 1986 and 2017, according to Capital One Shopping.

More Macy’s Coverage:

Macy’s sits on gold and shareholders are angry Macy’s mass store closing plan could have unexpected benefits Macy’s brings in new fashion partner for kids and parents

Yet, this retail shrinkage has created new opportunities for more lucrative mixed-use redevelopment.

The U.S. Real Estate Market, valued at $130.02 billion in 2024, is expected to grow 4.1% annually through 2030, according to Grand View Research.

Investors, experts urge Macy's to capitalize on real estate

Activist investors have long argued that Macy's is sitting on a goldmine. Shareholders estimate the company's real estate holdings could be worth as much as $9 billion.

In 2024, Barington Capital Group and Thor Equities, both Macy's investors, published a presentation urging the company to rethink its capital strategy and consider "structural actions" to unlock shareholder value.

The investors blamed Macy's ongoing struggles on past mismanagement and overinvestments in traditional retail initiatives that have failed to drive long-term performance.

"The one constant of all these ineffective actions has been Macy’s reliance on spending enormous amounts of the Company's cash flows on capital expenditure projects," said Barington Capital Group and Thor Equities.

"Unfortunately, these capital expenditures or actions focused on merchandising initiatives, cost reductions, and store closures have delivered limited sustainable improvements to Macy's operating results."

Retail experts agree with those concerns.

"Department stores are losing traffic, they're losing share. Macy's is no exception," SW Retail Advisors President Stacey Widlitz told Yahoo Finance. "Macy's really just hasn't grown, and they continue to comp down."

Related: Macy's announces unexpected closure ahead of holiday season

This story was originally reported by TheStreet on Nov 9, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.

View comments