State Street is a venerated shopping street in Chicago. Prior to the construction of the retail stores on Michigan Avenue north of the Chicago River, State Street was the home to department stores with familiar names like Marshall Fields and Carson’s. And now there is news that Target is planning to open a store in Carson’s iconic building:

Target will lease 124,000 square feet over two floors, but only 54,000-square feet will be selling space, the company said.

The retailer, known for its cheap chic, has been in talks for more than a year to lease space at the landmark Sullivan Center at State and Madison Streets. Carson’s closed its store there 2007…

The city has poured $24.4 million in tax-increment-financing to help restore the Louis Sullivan building, which also houses offices. Chicago-based developer Joseph Freed & Associates, the building’s owner, has invested another $190 million in the national and Chicago historic landmark in the last decade.

“I applaud Target for bringing this urban store concept to Chicago, as well as the new jobs and economic opportunity this store will create,” Daley said. “Target will be an important addition to State Street, one of Chicago’s most important retail centers, and will be located in one of city’s most architecturally significant buildings.”

The State Street store would be in keeping with the discount chain’s recent strategy to push into urban cores with smaller stores. Target recently signed deals to open a 70,000-square-foot store in the heart of Seattle and a 100,000-square foot store in a shuttered Macy’s in downtown Los Angeles. Those stores are slated to open in 2012.

“We look forward to preserving this Chicago treasure and blending in with the building’s aesthetic, said John Griffith, executive vice president, property development at Target. “A hallmark of Target is our flexibility in store design.”

As for Target’s iconic red bull’s eye, the retailer is still working out the details of incorporating its logo while still respecting the building’s historic status.

This announcement comes as both Target and Wal-Mart have announced plans recently to move into more urban markets. A few thoughts about this:

1. It is somewhat ironic that the stores like Carson’s and Macy’s (purchaser of Marshall Field’s) are mainly about sales from suburban malls while stores like Target and Wal-Mart, symbol of big-box suburbia, now want to be part of the city.

2. Is there anyone who is going to complain about Target moving into this iconic building? When Macy’s bought Marshall Field’s several years ago and moved into the flagship store on State Street, a lot of Chicago residents were mad that one of their iconic businesses had been replaced. Will there be similar concern about Target or are people just happy that they can get to the trendy Target in the middle of the city? (Imagine if Wal-Mart was planning to move into this location.)

3. It will be interesting to see how Target blends their image and layout with this historic building.

4. What does this move say about State Street compared to other shopping areas in the city? State Street seems to be an odd mix of suburban stores on a historic street. Couple this move with the ongoing saga of Block 37 and one has to wonder if there is any long-term plan for State Street.