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Few companies timed major pre-pandemic decisions quite like Macy’s.
The nation’s largest department store chain announced in February 2020 that it would leave its Cincinnati headquarters for New York City and build a 1.5 million-square-foot office tower above its flagship store at Herald Square.
Around the same time, the retailer started leasing 640,000 square feet at The Jacx, Tishman Speyer’s massive office and retail complex at 28-07 Jackson Avenue in Long Island City. But the pandemic, which has particularly hampered retail in urban areas and cast doubt on the future of office properties, contradicted Macy’s efforts.
The company will push forward with its office development despite its Herald Square store being among its most challenged locations during the pandemic, according to CEO Jeff Gennette. But Macy’s is now looking to unload much of its Long Island City space in the subleasing market.
Besides Macy’s, major tenants at 28-07 Jackson Avenue include Macy’s subsidiary Bloomingdale’s, WeWork and The New York-Presbyterian Hospital, as well as a ground-floor restaurant owned by chef Dan Kluger. The 1.2 million-square-foot building was fully leased to six tenants as of August, according to Moody’s.
With no vacancy at the 26-story complex, Tishman recently refinanced the property with a $425 million CMBS loan secured by its fee interest. Documents associated with the securitization provide an inside look at the property’s finances.
The largest tenant, Macy’s, has leased 54 percent of the property, but is now reportedly looking to sublet more than 400,000 square feet. The company found a tenant for its sixth-floor space in the building and is reportedly in talks with two “anchor tenants” for additional space.
For its part, Tishman has invested heavily in Long Island City. The Jacx is located next to its three-building luxury residential development Jackson Park, with 1,871 residential units, as well as its 22-story office building, Two Gotham Center, which spans nearly 670,000 square feet.
Asking rents for office space have risen in LIC to $52.26 per square foot, a 61 percent increase from the $32.45 average seen in 2015, according to Moody’s.