PYMNTS-MonitorEdge-May-2024

Is Macy’s Selling Its Largest Store?

Macy’s largest store at its iconic Herald Square building might soon be listed on the Manhattan real estate market.

The decision to consider and evaluate the value of the Herald Square building, along with some of its other prime locations, came with the increasing pressure the retail giant has been facing from its investors to turn around its vast real estate portfolio, constituting over 556 stores, into separate companies, The Wall Street Journal reported.

While it might be a little premature to say if, how or when it would be listed, the company is looking into its real estate value and strategies for putting the 1.1 million square foot store area to better use.

The real value of the building somewhat remains a topic of debate among investors and real estate experts, with most quoting it between $3 billion and $4 billion.

Some analysts at investment bank Cowen & Co. estimated the value at $3.3 billion in July. However, Landauer Valuation & Advisory’s Chairman Robert Von Ancken sized it up to just under $3 billion. Most optimistic of all though was Macy’s investor Starboard Value LP CEO Jeff Smith who reportedly calculated it to be around $4 billion.

“The hard part is, there’s nothing like Macy’s Herald Square,” said Jim Costello, senior vice president at Real Capital Analytics, a real estate research firm, in an interview with WSJ.

Some of the many ideas being considered include converting sections of the building into condominiums or a hotel, according to analysts.

“There is clearly impressive potential,” said James Sullivan, a senior real estate analyst at Cowen. “That is the path to the highest value creation for the Herald Square store.”

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PYMNTS-MonitorEdge-May-2024