Macy's Seeks Potential Buyers for Stakes in Flagship Storesby and
Partial sales may include Herald Square store in Manhattan
Tishman Speyer interested in NYC, San Francisco, Chicago
Macy’s Inc. is seeking to sell stakes in its flagship stores, including its landmark building on West 34th Street in Manhattan’s Herald Square, one of New York’s top tourist attractions.
The largest U.S. department-store company said it hired Eastdil Secured LLC, a real estate investment bank, to “approach potential interested parties” about forming partnerships or joint ventures for the Manhattan locale as well as downtown stores in San Francisco, Chicago and Minneapolis, plus its mall-based properties. Tishman Speyer has expressed interest in taking stakes in the four flagship stores, Macy’s said in a statement Wednesday.
Macy’s is under pressure from activist investor Starboard Value, which wants the retailer to extract more value from its property holdings. Macy’s said in November that it won’t form a real estate investment trust, a move Starboard had endorsed as a way to boost the stock price. Now, Macy’s is looking for other ways to capitalize on its real estate as sales and profit take a hit from an unseasonably warm November and December and unfavorable currency valuations.
The 34th Street store is “probably one of the most significant retail buildings in the world,” Jeffrey Roseman, executive vice president for retail at brokerage Newmark Grubb Knight Frank who isn’t involved with the property, said in an interview. “It’s high profile, it’s high visibility. If you want to own a piece of real estate in New York and you have any sort of ego, it’s as good as it gets.”
In November, Macy’s said it engaged Tishman Speyer to help in “identifying and advancing potential store redevelopment projects nationwide” and that it might ask the New York-based developer to bid on certain projects. In August, Tishman Speyer agreed to buy a portion of a site in downtown Brooklyn where Macy’s has operated since 1865, with plans to build 10 stories of offices above the store.
In Wednesday’s statement, Macy’s said Tishman Speyer has withdrawn as an adviser on the partial sales of the flagship stores and will continue to assist the company on potential opportunities involving its other properties.
Bud Perrone, a spokesman for Tishman Speyer, declined to comment on the statement.
Macy’s opened a store in Herald Square in 1902, then expanded it in three phases to its current 2.2 million square feet (204,000 square meters), covering a full city block, by 1931. In 2012, the company embarked on a four-year, $400 million renovation. The project created a “hall of luxury brands” that included expanding its Louis Vuitton shop, and opening what Macy’s called the world’s largest women’s shoe department.
Tishman Speyer is a global real estate company with properties on four continents. Its assets include New York’s Rockefeller Center and Chrysler Building, Frankfurt’s Messeturm and London’s Tower Place.