With historic designation, makeover of downtown Dayton's gets financial and nostalgic boost

The downtown Dayton's store won designation in the National Register of Historic Places, capping a two-year drive by its new owner to preserve most of the century-old complex and see a payoff from a $200 million renovation.

The designation by the National Park Service makes the store — actually a complex of three buildings and a parking garage at the center of downtown Minneapolis — eligible for federal tax credits and other incentives.

"We're doing a historically sensitive renovation, and this allows us to illustrate to the public our commitment to that," said Brian Whiting, president of the Chicago-based Telos Group, a partner in the redevelopment. "It also opens the door to certain tax credits that help overcome the cost."

For decades the flagship store of Dayton's Co., forerunner of Target Corp., the 1 million-square-foot complex is being renovated for offices, new retailers, restaurants, a food hall, fitness center and other uses, and is due to open next spring.

Its listing on the National Register raises the likelihood that more elements of the building — from the offices of the founding Dayton family executives to the sweeping curves of the Skyroom salad bar — will remain.

"When you walk into the building, you'll still get that feeling that you're walking into Dayton's department store," Whiting said.

Owner 601W Cos. of New York began pursuing the designation shortly after buying the complex in January 2017 from Macy's Inc., which closed its store there in March that year. Macy's acquired the building in a merger with another department store firm in 2005.

With its partners, 601W aims to capitalize on the building's location and its history as the figurative center of Minnesota retailing. It dubbed the makeover the "Dayton's Project" and even licensed the old Dayton's logo.

601W hired New History, a Minneapolis-based consulting firm, to help pursue the National Register designation. Despite the age of the complex and the role that Dayton's played in the lives of many Minnesotans, getting the building complex onto the National Register "was not a slam dunk," said Meghan Elliott, founding principal at New History.

"There's no question that what it represents — the Dayton Co. and its impact on retailing and philanthropy here and throughout the country — is an important story," Elliott said. "The concern was whether you could still see that story in the building despite the number of changes to it."

Her firm's research showed 14 phases of construction at the complex, the first in 1902 with a three-story building at S. 7th Street and Nicollet Avenue. As well, its very nature as a store meant the inside of the building underwent numerous physical changes through the decades.

"What people remember from, say, the last 20 years wasn't really anything that it looked like historically," Elliott said. "We knew it was really important to the economic viability of the project to make a good case that you could still see the history in the building."

As they pursued the National Register designation, 601W and Telos were negotiating with historic preservationists about changes they planned to make as part of the renovation, including creating an atrium-like area by cutting away some of the floor on the first and second levels.

With the National Register designation, the developers and tenants will be forced to preserve more of the older elements of the Dayton's building. They will also get the financial break for doing so. 601W and Telos undertook a similar strategy to renovate Chicago's Old Main Post Office.

"There's a lot of things in here that would be much easier if we just ripped down and built new. Plaster ceilings, columns, things like that fall within the [National Register] guidelines," Whiting said.

"We don't mind doing this. It's part of the image that we want in this project, but it does add extra cost and extra burdens to the leasing process," Whiting added. "The historic designation gives us the opportunity to offset some of those so we can go down this route."

Evan Ramstad • 612-673-4241