[NYguy]

https://www.retaildive.com/news/macy...topper/555014/

Macy's Herald Square could get an office tower topper


Daphne Howland
May 17, 2019

....."Macy's, like Sears and to a lesser extent JC Penney, is really two separate companies today — a largely obsolete retailer and an enormously valuable real estate company," Nick Egelanian, president of retail development consultants Siteworks, told Retail Dive in an email. "Sears funded decades of operating losses by selling its most valuable real estate (actual real estate and long term leasehold rights) and eventually figured out how to directly monetize parts of its remaining 'fleet' by creating [real estate investment trust] Seritage. Macy's is in a similar position. While it still operates profitable stores on the coasts, much of the rest of its fleet is simply not viable for retail any longer."

There was never a chance that the company would unload its iconic flagship, Macy's said. "Herald Square is a highly productive and profitable store and is important to our brand, to our customers and to the neighborhood," according to the spokesperson's statement. And Macy's real estate assets, including its flagship, are different than Sears', according to Egelanian.

"I don't know the office market at Herald Square per se, but I am quite confident that over the long term, densifying its holdings at Heralds Square is a very sound real estate strategy that will make sense for Macy's investors and shareholders," he said.

The building is too large for retail in the age of e-commerce and in a city that just unveiled a massive new retail development in Hudson Yards. Among the many questions surrounding these early plans is whether an office or mixed-use addition could attract tenants, according to Mark Cohen, director of retail studies at Columbia University's Graduate School of Business.

"There's no question that Macy's Herald Square store is way overspaced and that some amount of that excess space carries value that could be liberated via some form of sale and redevelopment," he told Retail Dive in an email. "But I can't imagine a commercial tenant or residential developer paying any kind of premium to occupy space in what is a cluttered and crowded location in place of far more attractive alternatives such as Hudson Yards."

Whatever plan Macy's ultimately does unveil promises to be controversial, according to architect Bruce Kopytek, who writes about department store history, including their often iconic buildings, and has worked on various retail store additions and renovations. He noted that similar plans to build an office tower atop Grand Central Station were quashed by historic preservation activists led by Jackie Kennedy Onassis, in a 1978 Supreme Court decision that also helped establish the New York City landmarks law that Macy's executives are no doubt coming up against today, he said. And the project is likely to be highly disruptive to the surrounding area as well as to the building itself.

"That Macy's store is really a beautiful building, and it's one more affront on history," he said in an interview. "You can't just build on top of that building. You need four-foot holes to the foundation, which in New York goes down to bedrock. The ensemble of buildings there​ has its own scale. Putting a new modernist tower on top of it is a little bit of an affront to my senses, and I think it would be to a lot of people."

They always speak to the wrong people...

I can't imagine a commercial tenant or residential developer paying any kind of premium to occupy space in what is a cluttered and crowded location

Obviously has never been to Grand Central, where the really expensive office towers are rising. And this is a better location transit-wise than the Hudson Yards.