Written by Lily Katz with assistance from Matthew Townsend
Retailer has been seeking to unlock value from its real estate
- Herald Square skyscraper would be used by other companies
Macy’s Inc. has held preliminary discussions with New York City officials about building a skyscraper on top of its flagship store in Manhattan’s Herald Square as the old-guard retailer seeks to unlock value from its real estate.
The company has floated plans for a 1.2 million-square-foot (111,500-square-meter) office tower that would be used by other tenants, according to a person with knowledge of the matter. Macy’s probably would push for zoning changes around its property to allow for the 800-foot (244-meter) building, which would bring an estimated 6,000 additional people to the area, said the person, who asked not to be identified because the talks are private. The plans are exploratory and may change.
Macy’s shares jumped as much as 4.5 percent to $25.76. They were trading at $25.28 at 1:36 p.m. New York time.
A representative for Macy’s had no immediate comment. A spokesman for Manhattan Borough President Gale Brewer confirmed that she met with the retailer about its plans late last month.
“Such a major addition of square footage to the area will require major public improvements to the streets and sidewalks that surround the Herald Square neighborhood, and I look forward to Macy’s contributions to ensure that this part of Midtown and the Garment Center sees relief,” Brewer said in a statement.
The flagship, opened in 1902, is a tourist hot spot, drawing crowds to see the Christmas window display, sit on Santa’s lap and take in the scents of the annual flower show. Macy’s completed an expansion in 1924, making it the largest store in the world. The new skyscraper would sit atop the older part of the property and have an entrance on 35th Street, the person said.
Macy’s, which owns about 360 of its 867 stores, has said in the past that it’s seeking to reap more profits from its real estate holdings, including its Herald Square flagship. Chief Executive Officer Jeffrey Gennette told investors on a February conference call that the company was seeking input from city officials and community stakeholders on plans to “unlock additional real estate value” at the iconic site, and expected to provide more detail later this year.
“Over the last year and a half, we have been working closely with a team of land-use, development and design experts to produce a menu of economically viable redevelopment alternatives,” Gennette said. “These could densify the real estate with complementary uses and will certainly preserve the store and enhance the customer experience.”
In the near term, Macy’s will continue investing in the retail space at Herald Square and is planning “a number of exciting enhancements” in 2019, he said.
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