But a major issue for the retailer is what to do about its flagship Herald Square store in Manhattan, easily its most prized real estate possession.
The iconic 1.1 million sq-ft store sprawls over the better part of a block, including retail space, offices, and warehouse space, and it would be difficult to pinpoint a price on it.
There are songs and movies about Macy’s in Herald Square, and of course the retailer’s beloved Thanksgiving Day parade ends up there. Macy’s could gain some $3 billion to $4 billion for the property in a sale (it’s hard to pin down what it’s worth in terms of real estate), but what would it lose?
That’s also hard to pin down, and it’s not something that the investors who want to extract the real estate value out of the property at the height of the market necessarily want to consider.
“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.
If the American department store is on the way out, major changes to the building — conversions to condominiums or office space for other companies, for example — would be options that could further extract value from the property.
Still even with such a windfall, the loss could seem enormous down the road. After all, once the building is sold, it’s gone. And the retailer would have to continue to pay rent to any REIT or new owner.