Macy's is still seeking a buyer
Share with others:
In the past year, Macy's has cut the number of floors at its Downtown store and rearranged departments, all with an eye toward selling the iconic building or at least leasing some of the upper floor space.
But it still lacks one thing: a buyer.
Twenty-six months after first marketing the 13-story building for sale, Macy's has yet to find someone willing to take a chance on the property or a tenant interested in sharing space with the department store.
That's despite a robust real estate market Downtown that has seen a number of prominent properties change hands in the last two years, including U.S. Steel Tower, PPG Place, the Henry W. Oliver Building and 11 Stanwix Street.
Yet some local real estate experts aren't surprised that Macy's is having a hard time finding takers, particularly given the proposed shared arrangement, with a department store anchoring the lower floors and offices occupying the upper ones.
So far the long wait hasn't deterred Macy's from its mission. Spokesman Jim Sluzewski said Wednesday the retailer still is actively seeking a buyer for the property or someone to rent the upper floors.
"The building continues to be for sale ... we're open to discussions on other potential uses," he said. "Our objective continues to be to keep the store and the [Macy's] offices in that building, and find some better use for the upper floors."
Macy's put the building, which for decades housed the Kaufmann's department store, up for sale in July 2010. At the time, the retailer said it was interested in an arrangement under which it would lease back from the buyer the space needed for a reconfigured department store as well as its regional and district offices. The rest of the space would be available for redevelopment.
The other alternative, Macy's said at the time, was to retain ownership and to find a tenant interested in leasing unused upper floor space, perhaps for offices.
Last year, Macy's consolidated all of the store's retail, including furniture, on the first six floors, plus the mezzanine. The seventh floor now is used for offices, and the Premier Salon is on the 11th floor.
Mr. Sluzewski doesn't think it's unusual that Macy's has taken so long to find a buyer for the building, which spans a block of Smithfield Street between Forbes and Fifth avenues. The property is being marketed by real estate firms Cassidy Turley and Grant Street Associates.
"In many cases, it takes a very long period of time to identify someone who needs the space and who wants to make a deal, especially when the economy is soft and financing is hard to get," he said.
He would not say what kind of interest there's been in the building.
While Mr. Sluzewski said Macy's still is interested in selling the building, he added that it is open to discussing "any and all options," one being to retain the property and to lease part of the space to someone else.
"We'll look at any and all ideas to make use of that upper floor space," he said.
Mr. Sluzewski said Macy's at this point is not planning any more changes as far as space devoted to retail. He noted, however, it is willing to work with a buyer or a tenant to configure space to suit individual needs.
"The configuration at the end of the day would depend on the needs of the party" that wants to buy or lease space, he said.
Gerry McLaughlin, executive managing director of the Newmark Grubb Knight Frank real estate firm, said some potential buyers might hesitate to take a chance on the building given the proposed dual uses.
He noted that there would be costs involved in separating the department store from offices or whatever other use a buyer had in mind for the upper floors. Converting the unused department store space into office space also could be costly.
Compared to some of the other recent sales Downtown, "It's not as easy to sell a building that has a department store in it," he said.
Mr. McLaughlin said he hasn't seen any advertising or a marketing plan for the building lately. Despite the challenges, he still believes Macy's is in the position to find a buyer.
"Based on the location, there should be a great opportunity to find users for the space," he said.
The building has a long and rich history Downtown dating to the latter 1800s when the Kaufmann family opened a store at Smithfield and Diamond Alley (now Forbes Avenue). The store expanded rapidly, eventually occupying Smithfield between Fifth and Forbes. By 1913, the building in its current form existed.
First Published September 6, 2012 12:00 am