Miracle on 34th Street: Macy’s Undergoes $400 Million Renovation
Daniel Geiger May 23, 2012, 9 a.m.
Macy’s has begun an ambitious $400-million renovation of its landmark store on 34th Street, work that highlights the department store’s resurgence in recent months.
“It kicked off this March,” said Macy’s spokeswoman Elina Kazan, in a conversation with The Commercial Observer. “The work is in the opening phase, which is taking place on the main floor, the mezzanine level and the second floor. It will take several years to complete.”
Ms. Kazan said she could not specify how much the initial work would cost out of the $400-million budget that has been publicly disclosed but described the construction as substantial. Adding complexity to the project is the fact that the renovation is taking place in a store that is one of the busiest retail spaces in the world and remains open for business.
“We’re still operating the store as we do the renovation,” Ms. Kazan said. “For weeks and months prior to the start we were moving departments around to clear the areas that are being made over.”
The work will create the largest women’s shoe department in the world, Ms. Kazan said. The second-floor location of this shoe mecca will serve as an impulse fashion floor, where women may cave in to their fondness for footwear. Also being redone is the store’s main Broadway entrance. Ms. Kazan said that the Macy’s store was being retooled to feature more luxury brands.
“We’re going to be selling a lot more top-line brands,” Ms. Kazan said. “We saw there was a big hole in the market in Herald Square. You can get luxury to the north on Fifth Avenue and south in areas like Meatpacking, but there’s no one really offering those types of products where we are.”
Macy’s flagship store is roughly one million square feet in size and is widely considered the largest single tenant retail store in the world. Though the space is an iconic retail location, its space, according to retail experts, had begun to look arcane and worn out from decades of visitor traffic. Macy’s however, has begun to reemerge in recent years as a successful large-scale retailer at a time when many other large box stores are struggling to produce sales commensurate with their size. The company’s strong performance would seem to pave the way for investment in its headquarters as other large stores are looking to shift focus away from the brick and mortar.
Macy’s reported strong earnings in the fourth quarter of 2011 and in the opening three months of 2012, including a 38 percent increase in year-over-year profits in the first quarter.
“In recent years you have seen a lot of retailers start to try to slip into smaller-space footprints to become leaner and meaner,” Patrick Smith, a retail broker with SRS Real Estate Partners, told The Commercial Observer. “If you look at a store like Best Buy, they used to be a 50,000-square-foot tenant and now you’ll see them taking 30,000 square feet or less—if they’re doing deals at all.”
As a whole, many retailers have begun to think about limiting their square footage as the Internet becomes an increasingly popular pipeline for shopping. But Mr. Smith, a leading retail broker in the city and nationally, said that clothing and apparel sellers like Macy’s have been able to buck that trend, at least in hot urban markets like Manhattan, because they sell products that many consumers prefer to touch and feel.
“Clothes, apparel and accessories are still something that many shoppers want to actually see,” Mr. Smith said. “And shopping is a social experience, and I don’t think that’s going to change either.”
Ms. Kazan added that Macy’s will be installing a new restaurant space on the sixth floor as part of the overhaul.