Target eyes Macy's site, Menino says

Executives at Target Corp. are interested in occupying the site of Macy's department store in Downtown Crossing should it become available, according to Mayor Thomas M. Menino.

''I'm a big fan of Target," Menino said. ''It would bring a lot of vibrancy to that area."

Menino said he discussed the possibility of an expansion in the Boston area with a Target executive while they were both in Istanbul attending a conference of the International Council of Shopping Centers last month.

''It's just common sense," Menino said of a chain like Target moving to downtown.

The Macy's building, while currently occupied, could be available soon. Federated Department Stores Inc., which operates the Macy's chain, agreed to buy May Department Stores Co., parent of Filene's, in February for $17 billion. That would leave the newly merged company with two stores -- Macy's and a Filene's--facing each other downtown.

Federated has not said what its plans are for places like Boston where it will have adjacent stores, but industry specialists expect regional names like Filene's to disappear, giving way to Macy's, which is better known nationally. Under such a scenario, Macy's could vacate its Downtown Crossing store and take over Filene's location across the street. A combined Federated-May could also install another one of its own upscale retail stores, such as Bloomingdale's or Lord & Taylor.

Across the country, big retailers are looking to revitalized urban areas as new growth markets, especially as the suburbs become saturated with large discount stores.

''As real estate in urban centers becomes more difficult to secure, Target is looking for ways to develop stores in cities," said Target spokeswoman Paula Thornton-Greear.

''While we're very interested, it's premature to say a Target is definitely coming to that site or speculate on an opening," Thornton-Greear said. ''But we love Boston, and we're looking for new ways to develop stores to fit that particular urban downtown."

In the past few years, Target has opened stores in New York, Minneapolis, Chicago, Los Angeles, and Atlanta.

Target is a discount store that has become known for its fashion and quality. Macy's and Filene's are both more traditional department stores, selling apparel to men, women, and children, as well as household items.

To fit in the dense city landscape, Target has made two-story stores at some locations, with escalators built for carts so shoppers can navigate both levels.

Over the last two years, Home Depot has opened three smaller stores in city centers, two in Manhattan and one in Chicago, where the garden center is located on the roof deck.

''These metropolitan areas were clearly underserved," said Chris Gronkiewicz, a spokeswoman for Home Depot's northern division. ''Home Depot has an ongoing interest in the urban format."

Last August, Wal-mart Stores Inc. opened a store in downtown New Orleans as part of an affordable housing redevelopment project, and the company is starting construction on a site in Chicago.

Daphne Moore, a Wal-mart spokeswoman, said close to $100 milliona year was being spent by New Orleans consumers at other Wal-marts outside the city. Today, she said, New Yorkers are spending nearly $90 million annually at Wal-mart locations outside the city.

''Wal-mart started in rural areas where people didn't have the same options as residents of cities," Moore said. ''The flip side is true today. In mini-urban markets, consumers don't have the same access to selection and prices that residents in suburban and rural areas have."

Suzanne Mulvee, a real estate economist with Property & Portfolio Research Inc. in Boston, said space constraints make it difficult to build anything large in Boston, never mind a Wal-mart or Target.

''What you need is an existing retailer to go dark. And with the Federated-May merger, in Downtown Crossing, the likelihood of this is growing," Mulvee said.

Darrell Rigby, head of Bain & Co.'s global retail practice, said city centers have become attractive opportunities for big retailers, especially as safety has improved in many urban locations.

''It presents unique challenges -- store formats are less flexible and you're not as likely to sell lawn mowers," Rigby said. ''But Target knows this is an important growth opportunity."

Target moved into Boston's South Bay Center shopping area, in space formerly occupied by Kmart, in March 2004. The chain affectionately known as ''Tar-zshay," with a franco-sounding ''j" and silent ''t" has 10 stores in the Greater Boston area, including in Watertown and Somerville.

''If you look at the demographics in urban settings, they're fantastic," said Geoff Millerd, a senior director at the real estate company Cushman & Wakefield of Massachusetts Inc. He said generally there are far fewer retail stores per person than there are in suburban areas.

Carol Sanger, vice president of corporate affairs of Federated, which has headquarters in Cincinnati and has owned Macy's stores since 1994, said the companies are beginning to plan, but she declined to discuss what may be in store for Downtown Crossing.

''It's very early in the process," she said. ''We're waiting for regulatory and shareholder approval" of Federated's purchase.

Indeed, Federated could keep both stores, which are well established, in place and share customers or phase out Filene's and move in a store whose merchandise would be more differentiated from Macy's, said Annette Born, a principal of the consulting firm Urban/Born Associates. ''My sense is they'd close Filene's and put a Bloomingdale's in," she said.

The whopping 800,000-square-foot Macy's store used to be owned by Macy's. But Macy's owner sold it to Markley Stearns Partners of Los Angeles in 1999 so the upper floors could be used for what then looked like a burgeoning telecom industry.

The upper space is now in telecom use, according to an executive of the Markley Group, successor to Markley Stearns Partners, and Macy's has a long-term lease on the lower floors' 389,000 square feet, or about half the space in the building.

The typical Target store occupies about 125,000 square feet of space, less than half of what Macy's has today.

Nonetheless, Stephen R. Karp, who created an empire out of shopping centers, said Target and other retailers would like to be in the Macy's space in Boston.

''They'd love to be in downtown," Karp said. ''Anyone would."

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com; Jenn Abelson at abelson@globe.com.