“All that volume of space and property in the Borough of Brooklyn, County of Kings, City and State of New York, which lies between the horizontal planes, the elevations of which are 24.96 feet and 43.87 feet…”
So begins the description of an unusual, quietly-held and — insiders say — extremely valuable stake the Chera family’s Crown Acquisitions owns in the Macy’s garage at 11 Hoyt Street, between Fulton and Livingston streets. The parking facility sits across Hoyt from the Macy’s flagship Brooklyn department store at 422 Fulton Street.
Last month, the Cincinnati-based retailer announced it was offering to sell 422 Fulton Street, its department store building with 759,800 square feet of development rights. News reports said firms such as Thor Equities and Vornado Realty Trust were eying the parcel.
Yet the Macy’s offering is actually larger and more complicated than previously disclosed, The Real Deal has learned.
A CBRE investment sales team led by Vice Chairmen Darcy Stacom and William Shanahan is marketing not one, but two Macy’s buildings. In addition to the department store, Macy’s is offering its massive garage at 11 Hoyt Street. That five-story structure has 584,000 square feet of development rights.
The department store is asking for proposals from developers that would include building a new 300,000 square foot Macy’s (or rehabilitating the old one) and a 25,000-square-foot Bloomingdale’s Outlet store, that would also have frontage on Fulton Street, insiders said.
A spokesperson for Macy’s would not comment on any development projects for the sites.
“Brooklyn is an important market for Macy’s, and we are studying ways to improve our business [there],” a Macy’s spokesperson said in a statement to TRD.
“We have made no determinations on how to do so, and we have nothing further to report at this time. When we have something to announce, we will do so. Until that point, we will not comment,” the statement said. CBRE and Crown did not respond to a request for comment.
All told — and with the retail removed — a builder would have about 1 million square feet of residential development rights to construct and sell or rent, sources said. While prices for land have surged over the past year with some sites selling for more than $300 per square foot, for example a 45,280-square-foot site at 206 Kent Avenue in Williamsburg for $18 million, larger parcels typically sell for much lower prices per foot.
The most accurate recent comparable sale, brokers noted, was a deal by developer TF Cornerstone in April 2013. In that transaction, the firm payed $70 million — or about $140 per square foot — for a site with about 500,000 square feet of development rights a block away at 33 Bond Street, information from Massey Knakal Realty Services shows.
Timothy King, Managing Partner of CPEX Real Estate, said that with the ongoing building boom in Downtown Brooklyn, a large parcel like the Macy’s residential development rights would likely sell for up to $160 per square foot. That would equate to about $160 million.
But a sale of the two properties could prove to be a complicated affair. While the Macy’s department store parcel at 422 Fulton is owned in a straightforward manner, insiders said, a review of city records shows a different story at the garage parcel.
In January 1985, Stanley Chera, who at the time operated the retail store Young World, purchased 452 Fulton Street from Federated Department Stores (now known as Macy’s), for an undisclosed price. The deed describing the property that was being transferred begins with a typical recitation of the boundaries of the building at 452 Fulton Street, known as the metes and bounds.
But the document gets more interesting. It describes five property interests owned by Crown but within the building envelope of the garage, immediately south of 452 Fulton. The first is an approximately 25-foot by 22-foot patch of ground floor space. The four other pieces of real property are composed of separate cubes of space.
The parcels are not spread out within the large floor plates of the garage. Instead, they are just behind Crown’s building, as if forming part of an imaginary, 25-foot wide townhouse embedded within the garage.
The five parcels, recorded in two separate tax lots, add up to about 10,000 square feet of floor area.
That is just a drop in the bucket of the 584,000 square feet available in the garage space. But Chera’s small stake in the garage could prove to be a big headache to a developer.
While hypothetically possible to demolish the garage but leave untouched the area impacted by the property rights, real estate professionals said that would be difficult.
“I think this is going to be a very interesting set of circumstances,” King said when told of the ownership stake. “It gives Mr. Chera much more control over what [a developer is] able to do.”