In what surely seems like a win for downtown and for Mayor Daniel Lurie, regardless of whether he had a hand in it, Macy's has confirmed that it will not be closing its Union Square flagship store anytime soon, and will instead work with a developer to reimagine the property.

The announcement arrived Tuesday morning, as the Chronicle was first to report: Macy's is partnering with developer TMG Partners for the future development of its 600,000-square-foot store property, which spans most of the block on the southern side of Union Square Park between Geary and O'Farrell streets. TMG, and its CEO Michael Covarrubias, say they are "wildly excited" to begin work on reimagining the massive property alongside Macy's.

Covarrubias tells the Chronicle that they are still discussing the "right choice of uses" for the future development, and that they see great potential "for that building, in that place, at this time."

TMG is also involved with the renovation at 149 New Montgomery Street, the former Yelp headquarters, and the firm is in contract to purchase the Metreon complex, with plans to reimagine that as well.

This is good news for Union Square as a whole, as it struggles to fill a large number of vacancies — and as retailers are likely wary of filling those empty spaces on Powell and Stockton streets not knowing whether anchor store Macy's might close up shop within months.

Macy's announced in February 2024 that it had plans to abandon Union Square, as part of a larger sell-off of store properties nationwide. But the company said its store would not close until it found a buyer for the property.

Today's announcement makes it sounds like Macy's will remain in place for an extended period as the development plans take shape, and/or it sounds like a Macy's store could still have a place in the future redevelopment of the property.

This could still bring some disruption to the Union Square area, but there has been talk of building housing there going back at least five years. In early 2020, Sand Hill Property Co proposed turning the former I Magnin property at Geary and Stockton — which is connected to the Macy's property — into a mixed-use tower with 21 luxury condos in the mix.

In 2023, the SF Board of Supervisors loosened zoning restrictions around downtown and Union Square, allowing for offices on upper stories on parcels previously zoned as "retail only."

The decline of large-scale department-store retail in downtown areas is something being felt in cities across the country, and the announcement of the possible closure of the Union Square Macy's store came with the announcement that the chain would close 150 under-performing stores by 2026.

Macy's previously closed and sold off its former men's store on Stockton Street in 2016, and that has since been redeveloped as office space, with the Japanese-Peruvian restaurant Chotto Matte on its top level.

In other positive news for Union Sqare, Japanese retailer Uniqlo has plans to revive the former Old Navy store on Market Street, and other retailers like John Varvatos are returning to the area as well after previously closing stores. And the city and the Union Square Alliance are moving forward with a plan to revamp the lower three blocks of Powell Street, adding new lighting, pavers, and wider sidewalks, in an effort to attract retail back to the street.

Previously: Retail Experts Weigh In On Macy's Union Square Closure, Saying Downtown Shopping May Be a Thing of the Past