Macy's to Close Flagship San Francisco Union Square Store

Macy’s plans to shutter its massive flagship store in San Francisco’s Union Square, in a major blow to the city’s already sluggish downtown recovery efforts, city officials said.

The 700,000-square-foot location is among the roughly 150 “underproductive stores” across the country that the retailer has slated for closure through 2026, including 50 by the end of the year, Macy’s announced Tuesday after posting a fourth-quarter loss and declining sales.

Mayor London Breed confirmed that Macy’s, which owns the property, intends to sell it within the next few years but said the company assured her that the location is not part of the first wave of closures and that the store would remain open until at least the end of the year.

“It will remain open until whatever decision happens around the sale and transition,” Breed said at a press conference. “We do believe this could be still an opportunity for San Francisco. I mean, this is an iconic location.”

Breed stressed that the retailer’s move to close the department store was strictly a business decision and not based on other issues like crime, which she said had significantly declined in recent months.

“We know this has nothing to do with that decision,” said Breed, who faces a tough reelection bid, as voters express concerns about safety, homelessness and economic development, particularly downtown. “It’s really a larger business decision that Macy’s has made.”

The 150 stores on the chopping block account for less than 10% of Macy’s total sales, the company said.

“Our new strategy is designed to create a more modern Macy’s, Inc. and enhance the customer experience,” the company told KQED in an email, noting that it also aims to expand its line of boutique stores over the next year. “We intend to close approximately 150 Macy’s stores while further investing in our 350 go-forward fleet over the next three years.”

The Union Square location, which Macy’s has operated since 1947, stretches almost an entire city block and employs at least 400 people, according to the United Food and Commercial Workers Local 5, the union representing its workers.

The store’s imminent demise will be among the largest single retail closures in San Francisco’s history. It comes amid an ongoing exodus of major retailers from the city’s downtown, which has struggled to recover from the pandemic.

Last June, Westfield announced plans to give up its nearby San Francisco Centre mall on Market Street, the city’s largest indoor shopping center. And just over two months later, the city’s last remaining Nordstrom store, located inside the mall, closed its doors.

Breed waved aside concerns about other major retailers leaving the city, emphasizing that Neiman Marcus, also in Union Square, is committed to staying here and has “no plans to make any decisions around exiting San Francisco.”

“So many of our luxury retailers are doing really well in Union Square,” she said.

The Union Square Alliance, a collective of business owners in the neighborhood’s 27-block radius, said in a statement that the store “could still be open for years to come” as Macy’s looks for a buyer.

“In all likelihood, there will be a holiday shopping season and Macy’s great tree in 2024,” said Marisa Rodriguez, the group’s CEO. “Having said that, the situation is fluid, and there is no getting around the fact that this announcement hurts. For generations, Macy’s has been synonymous with Union Square.”

Rodriguez urged the city to negotiate with Macy’s to keep the store open.

“However, if that does not come to pass, our expectation is that a new owner for this iconic site will come forward to continue a fresh and vibrant vision at this critical location,” she said.

San Francisco Board of Supervisors President Aaron Peskin, whose district includes Union Square, said he was “devastated” to hear the news and urged the city to aggressively invest in the neighborhood ahead of the store’s closure. The location had “potential for mixed-use, food & beverage and residential on the upper floors,” Peskin said in a statement.

“Macy’s was one of the last holdouts against the national trend of retail closures and consolidations,” he added, “but as with every seeming blow to our downtown recovery, I see a potential opportunity.”

Breed acknowledged that the closure is emblematic of the dramatic change that downtown San Francisco is experiencing and pledged to continue working with Macy’s and any future owner to develop the site in a way that best served the city.

“We are going to see a bit of a shift downtown,” she said. “Instead of penalizing and focusing on fees and taxes and other things, our goal is to focus on how do we incentivize? How do we get people excited about investing in downtown for the possibilities of university soccer stadiums, day spas and other opportunities that we know people have an interest in?”

But Breed admitted that the closure announcement still comes as a major disappointment.

“Macy’s has always meant a lot to the people of this city,” she said in an earlier statement. “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.”