During a recent earnings call with investors, Macy’s CEO Terry J. Lundgren hinted at the possible repurposing of retail space in key stores — including its flagship 34th street location — in an attempt to attract more millennials into their retail spaces, according to Racked. On the heels of weak Q3 earnings, the idea of taking advantage of their extensive real estate holdings to develop new lines of revenue could be an attractive option for the retailer and its investors.
The Herald Square location alone is estimated to be worth upwards of $4 billion and retail space in the building could fetch more than $1,000 a square foot, according to some local New York real estate experts.
“The ground floor of Macy’s [Herald Square] is worth a fortune,” Joanne Podell of real estate firm Cushman & Wakefield recently told WWD. Plenty of brands would love “a chance to own a piece of the most famous flagship in the world. Macy’s can be selective about who comes in,” she continued. “A vendor with an ownership stake in the property may be more invested in the store — no pun intended — and do a better a job.”
Other retail pundits are chiming in with thoughts on how Macy’s could capitalize on its 34th Street goldmine location. Three levels of the store currently serve as company offices and storage, and could easily be converted into space to be utilized by other brands — like Apple or Microsoft — as retail space.
“If Macy’s exited 30,000 square feet of space on three levels at the Herald Square flagship,” said Jeffrey C. Paisner of Ripco Real Estate, “they’d get about $14 million in rent.”
Bridget Weishaar of investment research firm Morningstar added, “You wonder whether Macy’s couldn’t run their stores like shopping malls, with a spa or a SoulCycle or a gym.”
While the idea of sweating and saunaing where you shop may be appealing to some, these are all just speculations at this point. Macy’s itself has only hinted at the possibility, with CEO Lundgren saying on the recent earnings call that “the company will consider joint ventures or other tie-ups to redevelop portions of its key stores in a way that maintains a robust Macy’s presence while bringing alternative uses to the buildings.”