NEW YORK--(BUSINESS WIRE)--Macy’s, Inc. (NYSE:M) and Tishman Speyer today announced they have signed a real estate purchase and sale agreement that will enable a re-creation of Macy’s Brooklyn store and further enliven one of New York City’s most dynamic, transit-rich neighborhoods.
(Editor’s Note: Macy’s, Inc. this morning also issued separate news releases announcing second quarter 2015 sales and earnings, and a joint venture in China.)
Under the agreement, Macy’s will continue to own and operate the first four floors and lower level of its existing nine-story Fulton Street retail store, which will be reconfigured and remodeled. Tishman Speyer will purchase the portion of the site that Macy’s will not retain, which it will develop into approximately ten floors of distinct, first-class office space with appeal to a wide range of diverse companies. In addition, Tishman Speyer has agreed to purchase Macy’s Hoyt Street parking facility, which could be used for a future mixed-use development.
Macy’s will receive $170 million in cash from Tishman Speyer for its Brooklyn real estate assets and will receive an additional $100 million over the next three years that will be used as a contribution toward renovation of the Brooklyn Macy’s store.
“Brooklyn has emerged as one of the most dynamic, diverse and vibrant communities in America. This is a place we know well and have served with a highly successful downtown store on Fulton Street since 1865. In recent years, it has become clear that our Fulton Street store requires major improvements in order to serve the Brooklyn of today, as well as future generations of customers. We invested the time and resources necessary to fully study and understand the opportunity for making a major positive impact on Brooklyn and selecting the most capable partner in the project. We are now moving forward with a bold and exciting project with Tishman Speyer, one of the world’s most experienced and visionary developers,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer.
“As developer, owner and operator of such New York City icons as Rockefeller Center and the Chrysler Building, we are thrilled at the opportunity to partner with Macy’s for our first-ever project in Brooklyn,” said Tishman Speyer Co-CEOs Jerry Speyer and Rob Speyer. “We believe this partnership will produce a transformative mixed-use development in one of the nation’s foremost destinations for today’s creative workers and new economy companies.”
Macy’s store, currently occupying 378,000 square feet of selling space on eight floors will be re-created into a more efficient store occupying 310,000 square feet on five floors (levels one through four, as well as the basement). A portion of the interior of the building will be re-constructed to level the floor elevations. New elevators and escalators will be installed. From top-to-bottom, the interior of the store will be entirely remodeled. Key architectural elements of the exterior of the building will be preserved. The Macy’s store will remain open and operating through the remodeling process.
In tandem with the redevelopment of Macy’s store, Tishman Speyer will create architecturally-distinct, headquarters-quality office space featuring 16-foot ceilings, ample outdoor spaces and easy access to 10 separate New York City subway lines, all of which will appeal to a wide range of traditional companies and new economy firms. Work is expected to begin on both the retail and office portions of the Fulton Street property in the spring of 2016, with all elements expected to be completed by the fall of 2018.
Macy’s downtown Brooklyn store, built in 1865 as Abraham and Straus, has grown and developed with the community around it.
Over the next three years, Macy’s is reinventing the Brooklyn store to create a fashion hub serving neighborhoods from Dumbo to Manhattan Beach. The renewed store will fuse Macy’s traditions with Brooklyn’s local flavor to create a modern environment of cutting-edge style and hip, urban attitude. Highlights include:
- The main floor will feature high ceilings and dramatic rooms to house Macy’s signature businesses in cosmetics, fragrances, shoes, handbags and accessories.
- Each floor will be leveled to create larger footprints and offer an expanded assortment of new fashion brands, including Macy’s renowned private brands.
- Windows on the upper-levels will be uncovered to allow for more natural light.
- Street-level entrances and display windows will be refreshed.
- Restroom facilities will be upgraded.
- A Starbucks with after-hours access from Fulton Street.
The Macy’s store’s workforce of about 490 associates will remain in place. The Macy’s photo studio that has operated on the upper floors of the downtown building is being relocated to refurbished space in a leased building in Long Island City.
The real estate transaction is expected to be completed in the fourth quarter. As a result, Macy’s, Inc. is expected to record a gain of approximately $250 million in its fiscal fourth quarter of 2015.
About Tishman Speyer
Founded in 1978, Tishman Speyer is one of the world’s leading developers, owners, operators, and fund managers of first-class real estate. Active across North America, Europe, South America and Asia, Tishman Speyer is relied upon by many of the world’s most prestigious corporations to meet their office space needs. As of March 31, 2015, the firm had acquired, developed and/or managed a portfolio of approximately 133.8 million sq. ft. with a total value of approximately USD $73 billion. Signature assets include New York's Rockefeller Center and Chrysler Center, São Paulo’s Torre Norte, Ventura Corporate Towers in Rio de Janeiro and OpernTurm in Frankfurt. Tishman Speyer also has projects at different stages of development currently in Atlanta, Brasília, Chengdu, Frankfurt, Gurgaon, Hyderabad, Paris, Rio de Janeiro, San Francisco, São Paulo, Shanghai and Suzhou.
About Macy’s, Inc.
Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2014 sales of $28.105 billion. The company operates about 885 stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s, Bloomingdale’s, Bloomingdale’s Outlet and Bluemercury, as well as the macys.com, bloomingdales.com and bluemercury.com websites. Bloomingdale’s in Dubai is operated by Al Tayer Group LLC under a license agreement.
All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy’s management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including conditions to, or changes in the timing of, proposed transactions, prevailing interest rates and non-recurring charges, competitive pressures from specialty stores, general merchandise stores, off-price and discount stores, manufacturers’ outlets, the Internet, mail-order catalogs and television shopping and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission.
(NOTE: Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/pressroom).