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Boston Globe

Macy's is closing 150 stores nationwide. Downtown Boston's may survive, thanks to the data center upstairs.

That's when a data center developer bought the building and made the block more about computing power than clothing sales. Even with all the server space that's now on the upper floors, the remaining Macy's store spans nearly 400,000 square feet across three levels, and serves as an important anchor for Boston's central business district. Losing what was once the flagship of the Jordan Marsh chain would be a blow to the city — and, in particular, to a downtown still recovering from the COVID-19 pandemic. Related : Advertisement It's a good thing for Boston that Macy's doesn't own the block. Real estate sales are often viewed by struggling retail chains as a quick way to make a decent buck. On a recent earnings call, chief executive Tony Spring boasted of 'asset sale gains' of $144 million in the past year from store closings, presumably reflecting sales of shuttered properties. No such fast money can be made by selling off Downtown Crossing, though. At least not by Macy's. Data center operator Markley acquired the block-sized building and built a large 'colocation' facility on the upper levels above the Macy's in the late 1990s, as the dot-com era was in full boom, creating a central spot where many of Boston's biggest employers rent space to host computer servers and networking equipment. Advertisement JLL executive Barry Hynes says the site is ideal for a data center because of all the telecom infrastructure buried in the streets below, not to mention the large floorplates and access to copious amounts of electricity. Markley set aside the bottom three floors for Macy's, for what's believed to be favorable lease terms. Markley proudly bills the complex it built above the store as the largest and oldest multitenant, 'mission-critical' data center in New England. A representative for the private company, which also manages a data center in Lowell, declined to comment about the leasing situation at One Summer, as did representatives for Macy's. Could the lucrative business of running a data center essentially defray some of the costs associated with the more challenging business of running a department store? It sure looks that way. Markley's customers run the gamut of Boston industries, per testimonials on the company's website. Office supplier W.B. Mason put much of its IT infrastructure there because an executive was impressed with the backup generators, uninterruptible power and cooling systems, and the in-house staff to oversee them. Beth Israel Lahey Health hosts nearly 90 cabinets worth of equipment in its own 'private colocation cage' there, equipment that played a pivotal role in the integration of the formerly separate hospital systems, Beth Israel and Lahey Health. And the Boston Red Sox turned to Markley for its data center needs, for everything from baseball analytics to online fan engagement, after not finding enough room to carve out several thousand square feet at Fenway Park for that purpose. Advertisement People streamed onto Jersey Street during the Boston Red Sox opening day at Fenway Park on April 4. Erin Clark/Globe Staff It's a computing powerhouse that goes unnoticed by the shoppers roaming through the racks and rows of Calvin Klein purses and Chanel perfumes to a soundtrack of upbeat pop music. But will the music eventually stop? Macy's plans to retain some 350 stores after its restructuring. Whitney Gallivan, a retail leasing expert with Boston Realty Advisors, said she doubts the Boston store would be closed unless Macy's embarks on a far more dramatic brick-and-mortar cutback, one that shrinks its footprint to only a handful of marquee locations. 'They have a long-term lease at a very, very low rent,' Gallivan said. 'They're hanging on to select key market stores where they're making money [and] a lot of ways retailers make money is with low rent. . . . If their sales-to-rent ratio makes sense, it's a no-brainer: Why shed a major market like Boston that's an iconic location and in the heart of Downtown Crossing?' Gallivan said she believes the Macy's term is for longer than the typical retail range of up to 10 years, and is, in all likelihood, 'extremely tenant friendly.' Plus, it's helpful to Markley's data center business that the street level be occupied and busy, not empty and dark, to reduce the likelihood of drug-dealing or other street crimes. While launching his aggressive store-closing plan last year, Tony Spring also embarked on an initiative to invest more money, in part for staffing and training, in a select group of 50 locations. The company recently added 75 stores to that list; Downtown Boston Alliance president Michael Nichols said he's been told Macy's is part of that next tier slated for reinvestments. Advertisement 'To be in that group is to suggest that they are actually doubling down,' Nichols said. 'It is my understanding that the Downtown Crossing store has been selected for an enhanced investment from the parent company, or the home office. We have real confidence [in] this store.' In contrast, Advertisement The list of survivors keeps shrinking. Shoulberg points to Chicago, Seattle, and Boston, as well as New York, where Macy's has its massive 12-floor flagship store in Herald Square, the largest department store in the country. For these survivors to endure, Shoulberg concluded, they'll need 'something else to bolster their financial balance sheets.' Fortunately for Boston, multiple floors of computer servers should do the trick. Jon Chesto can be reached at