Macy’s plans to “unlock additional real estate value” at its flagship store just got a bit more likely.
The retailer has held preliminary talks with New York City officials about building a 1.2 million-square-foot office tower at 151 West 34th Street in Herald Square, according to a Bloomberg terminal report.
The company’s stock, which has fallen nearly 17 percent over the past year, rose by 2 percent when the news broke, CNBC reported.
The company has recently brought up the possibility of new development at the site. In the latest earnings call in February, CEO Jeffrey Gennette said that the company was “beginning preliminary meetings with city officials and community stakeholders to gather their input and feedback.”
“In any strategy, to unlock additional real estate value will be on a long-term horizon,” he noted, adding that Macy’s would “certainly preserve the store and enhance the customer experience.”
Though Gennette mentioned that “a menu of economically viable redevelopment alternatives” was on the table at the time, he did not mention specific plans for an office building.
The existing 19-story Macy’s building, built in 1901, has 2.2 million square feet in gross floor space and sits on a roughly 134,000 square foot lot. This means that the building already exceeds the 10.0 floor-area-ratio allowed by current zoning.
It’s a similar play to what activist shareholder Jonathan Litt suggested Hudson’s Bay Company do with the Lord & Taylor Building at 424 Fifth Avenue and the Saks flagship on Fifth Avenue, though Litt advised the firm to build condos.