UPDATED 02/15/11 4:15 p.m.

CHICAGO (CBS) — Target confirmed Tuesday that it will be moving into the old Carson Pirie Scott building at State and Madison streets.

Target has leased a space amounting to about 125,000 square feet in the former Carson Pirie Scott & Co. building, at 1 S. State St.

As CBS 2’s Suzanne Le Mignot reports, the new store will be called CityTarget, which will be the name applied to small-format Target stores across the country. It is set to open in 2012.

The store will offer fresh food, apartment supplies, on-trend fashions and designer collections, according to the mayor’s office. It will be the tenth Target store in the city, and the retailer says it will create about 200 jobs.

“There are 20,000 people who live in the loop; 65,000 students who attend school in the Loop,” said Ty Tabing, Executive Director of the Chicago Loop Alliance. “This will only benefit them and provide an amenity for them in the neighborhood.”

Student Emily Wallrath said she’d be glad to have a Target with a grocery in the Loop.

“I’d come during the day, after school, before school. It would be a big nice thing,” Wallrath said.

City Target will be located inside the historic Sullivan Center, named for the famous architect who designed its elaborate iron and terra cotta exterior.

“We are proud to have a chance to come in and operate this City Target, inside this environment,” John Griffith, Target’s executive vice president of property development, said.

Some other businesses in the neighborhood couldn’t be happier, because they are hoping the Target store will be open longer than Carson’s was, which could mean more business for Target’s neighbors.

Frank Marin, manager of B & B Restaurant at 127 S. State St., said that when Carson’s closed, business at the restaurant dropped.

“By having a new store, Target coming in, it will bring a lot of business downtown, it will generate more business down here at this end of the Loop,” Marin said. “I think anywhere on State Street, it will help a lot.”

Some who work in the Loop said they hope it will help bring down prices for everyday items like fresh fruit, which tend to be more expensive at downtown convenience stores.

“What happens in the Loop is everyone inflates their prices and so to get an apple, you’re paying $1, $2 for one apple,” Loop worker Maisha Shaw said, “So if Target’s prices are reasonable, that would be helpful and convenient.”

Mayor Richard M. Daley was present for a formal announcement of the plans for the Target store, as will representatives of Minneapolis-based Target, and of developer Joseph Freed & Associates, which owns the building.

LISTEN: Newsradio 780 Political Editor Craig Dellimore reports

“This new Target also will fill more than a vacant retail space,” Mayor Daley said. “It will fill the need for jobs – something that we need very much in this difficult economy.”

“What Mayor Daley has done for this city is a lot like what Target does every day; a lot like great architecture. We do our job every day by providing great designed goods at great prices,” added Target executive vice present of property development John Griffith.

Carson Pirie Scott moved out of the building in 2007. Rumors of a Target store moving in date back to January of last year, but the retailer would not confirm the earlier reports.

Experts said rather than the sprawling megastore format that characterizes most Target stores, the Carson’s building store would be more similar to the Target at the Wilson Yard development in Uptown.

The old Carson’s building is now known as the Sullivan Center. It was designed by famed architect Louis Sullivan more than 110 years ago, and housed the flagship Carson’s department store for 102 years.

After parent company Bon-Ton closed the store, several plans to fill the space fell through. Rumored tenants including Whole Foods, now-defunct clothing chain Steve & Barry’s and Canyon Ranch resorts, never materialized.

Freed announced in 2008 that upscale grocer Fox & Obel would open a 25,000-square-foot store in the building, but that fell through, too. Australian surf shop Billabong International also dropped plans to open a three-level store in the building.

Urban Markets: A Big-Box Strategy

Both Target and Wal-Mart have been pushing plans for smaller stores to cater to the urban market.

But while no major opposition has been reported to Target stores downtown or elsewhere, a rumored plan for a Wal-Mart “neighborhood market” in the East Lakeview neighborhood got a chilly reception in December.

Upon rumors that a letter of intent had been issued for a Wal-Mart in a retail building on Broadway near Clark and Diversey, furious neighbors quickly organized a Facebook group and packed a community meeting in December. They expressed fears that Wal-Mart would put retailers on Broadway and Diversey Parkway out of business and rob the neighborhood of its economy and character.

While Wal-Mart later released a statement saying they had not signed a lease or a letter of intent for the site, activists in East Lakeview continue their involvement in the issue of Wal-Mart entering the city, and members claim Wal-Mart is still “sniffing around” the community.

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