Pending exit by Macy’s will alter downtown

More photos: The original Liberty House

Downtown Honolulu will lose its only major department store next month, and what fills the void left by Macy’s will go a long way in determining the future of the city’s core.

Macy’s Fort Street Mall store will close Feb. 28, and its final clearance sale starts Monday. The store’s 91 employees will be transferred to other stores or laid off with severance, the company said.

What replaces Macy’s on the corner of South King Street and Fort Street Mall could set the tone for a downtown district that has been plagued by the exodus of most inhabitants after sunset.

"You need more residential (occupancy) to make it a vibrant city that doesn’t roll up their sidewalks at 5 p.m. when everyone goes home from work," said local real estate analyst Steph­any Sofos. "That’s why putting in a residental component with office and retail would be the highest and best use because you’d … have all moving parts together — people working there, eating there and sleeping there."

Although Macy’s appealed to working men and women hoping to run a quick errand on their lunch hour, it didn’t draw traffic at night or on the weekends.

"It’s like a ghost town here on the weekends," said Darcy Lampe, 67, who stopped by the store Thursday to see whether closeout deals had begun. "But you can see it gets a lot of traffic at lunchtime."

Cincinnati-based Macy’s Inc. announced the closure of the 80,000-square-foot Fort Street Mall store early Thursday along with the shuttering of four other Macy’s stores — in Pasa­dena, Calif.; Belmont, Mass.; St. Paul, Minn.; and Houston — as well as a Bloomingdale’s in Las Vegas.

Macy’s, the nation’s No. 1 department store chain, had fiscal 2011 sales of $26.4 billion for its Macy’s and Bloomingdale stores, but it’s been a financial roller-coaster ride in recent years. Sales rose for the last two years after falling for the three previous years. The uneven results have stemmed from the 2005 purchase of May Department Stores, a slowing economy and a restructuring that resulted in layoffs and the closing of underperforming stores. Its fiscal 2012 financial results will be announced next month.

Fort Street Mall employees were told of the closure of their store at a meeting Wednesday afternoon.

The Honolulu closure will leave 17 Macy’s stores in Hawaii, including eight on Oahu, four on Hawaii island, three on Maui and two on Kauai. No other Macy’s store in the state is affected.

Macy’s had to make "the tough decision to selectively close underperforming stores that no longer meet our performance requirements or where leases are not being renewed," said Karen Hoguet, chief financial officer of Macy’s Inc., in a statement.

Macy’s spokesman Jim Slu­zew­ski said the company had an opportunity to sell back the lease on the Fort Street Mall store to building and land owner Lexington Hono­lulu LP, a New York-based real estate investment trust.

"Our Ala Moana store is less than two miles away, so the customer remains well served by Macy’s in Hono­lulu," Slu­zew­ski said.

Lexington purchased the Fort Street Mall store, along with two other nearby buildings and other land, for $34.66 million in December 2006 from the Campbell and Austin estates.

Lexington did not return phone calls and an email seeking comment about the future of the Macy’s site.

The Fort Street Mall area still has discount retailer Ross Dress for Less, which is directly across the mall from Macy’s, and Longs Drugs, which is adjacent to Ross.

The Macy’s site was occupied in 1850 by Hackfeld’s Dry Goods. The store was expanded in 1852 and renamed B.F. Ehlers & Co. In 1898 the name changed again to H. Hackfeld & Co. In 1918 Hackfeld was confiscated when the United States entered World War I and sold to American Factors Ltd. The store was renamed the more patriotic "The Liberty House," becoming the first of what would eventually be a chain of Liberty House department stores.

Liberty House was sold to Federated Department Stores Inc. in 2001 after emerging from Chapter 11 bankruptcy. Federated consolidated Liberty House into its Macy’s West division and, in 2007, Federated changed its corporate name to Macy’s Inc.

"It’s just unfortunate that what we’re familiar with is going by the wayside," Sofos said.

Star-Advertiser staff writer Sarah Zoellick contributed to this report.