Macy's Considers Adding a Tower to Iconic Herald Square Store
New York Post
January 7, 2016
by Lisa Fickenscher and Lois Weiss
Manhattan’s Herald Square may be heading for a makeover.
Macy’s, looking for ways to profit from its massive and valuable real estate holdings, may consider putting a slender tower or two on the top of its famed 34th Street flagship, The Post has learned.
The tower, or towers, could be used for hotel rooms or offices.
Macy’s recently retained Eastdil Secured to identify possible joint venture partners to tap into the value of its flagships in New York and other US cities.
On Thursday, a report by Bloomberg said Macy’s, as part of its effort to take advantage of its real estate’s worth, was weighing selling stakes in the flagships.
Tishman Speyer Properties, which had reviewed forming a real estate investment trust for Macy’s, has recused itself from advising on the flagship stores in New York, San Francisco, Minneapolis and Chicago, and will be among those making proposals.
TSP has already ventured with Macy’s on the redevelopment of its Brooklyn store.
A Macy’s spokesman didn’t dismiss the idea of adding towers.
“We will consider any and all ideas for all of our real estate assets in order to create shareholder value and enhance our operations,” a company spokesperson said in an e-mailed statement.
To be sure, building a tower — or two — atop the Herald Square flagship is a long shot.
To do so, the department store — whose Big Apple flagship takes up nearly the entire block bounded by Broadway and Seventh Avenue and 34th and 35th streets — must get approval to be rezoned, real estate executives said. The store, they noted, is “overbuilt.”
An overbuilt property is not unusual for an older city building, explained investment broker Richard Baxter of JLL, as the zoning text was written in 1960, long after Macy’s opened on the site in 1902. The store gobbled up other structures over the decades and underwent a $400 million renovation that started in 2012.
A corner building at 35th Street and Seventh is owned by Michael Shah, who bought it in mid-2015 for $14 million, city records show.
In an e-mail, Shah said he would be “open to conversations with whoever redevelops Macy’s portion.”
“The maximum for Macy’s is about 1.4 million square feet, and it is now 2.1 million feet and about 800,000 square feet overbuilt,” said Baxter.
Baxter suggested carving out an atrium in the middle and using that footage to build taller on the avenues and to reenergize the valuable retail space along 34th Street itself.
As the structure is a National Historic Landmark, any major façade changes are unlikely.
Dan Biederman, president of the 34th St. Partnership, noted that while Macy’s would need some rezoning to “massively increase the size,” the area has few residents who would be affected.
“The store is a jewel,” Biederman said.
A zoning consultant who requested anonymity said, “Anything is possible if a developer wanted to take the big risk to take the time and money go through [the city’s rezoning process].”