Would a skyscraper on top of Macy’s NYC flagship reach in the right direction?
Macy’s has been struggling to return to national prominence for some time, but CEO Jeff Gennette wants to focus on going big in the Big Apple. Mr. Gennette plans to transform the already large and iconic Herald Square Macy’s location into a massive retail landmark.
Mr. Gennette has committed to the building of a skyscraper atop the Herald Square Macy’s location as well as making an investment of $235 million into the area around the store, according to Bloomberg.
The 1.5 million square foot skyscraper as conceived of in February, 2020, would consist of mostly office space and feature a “Sky Lobby” section where visitors could look out onto Midtown Manhattan, according to New York Yimby. Macy’s investments in the surrounding neighborhood would consist of upgrading the Herald Square subway station and improving access points, building new entrances into nearby Penn Station, adding in ADA-approved elevators and upgrading the adjacent public plaza. The retailer anticipates the investment generating $269 million in yearly tax revenue for the city upon completion.
The impact of the novel coronavirus pandemic on how people work and live in NYC, however, has some wondering if the move represents a potentially expensive misstep.
The New York Times reported last month that businesses in the Financial District and Midtown are experiencing significant downturns in foot traffic because the majority of workers now work from home rather than in these primarily business-centric areas. An accompanying drop in tourism has also hit businesses in those areas.
Questions also remain about how many employees will return to working in these areas as the U.S. opens up. Many companies are considering staying with full-time work from home or hybrid working models.
The challenge of office space viability given the post-pandemic circumstances is not lost on Mr. Gennette, who told Bloomberg he sees the move as a “long play.”
Macy’s experienced an uptick in same-store and online sales in the first quarter this year, which Mr. Gennette believes is more than just a short-term pop. He explained on an earnings call that he is confident in “accelerated profitable growth in 2021 and beyond.”
- Macy’s Needs Another Miracle on 34th Street – Bloomberg
- Macy’s Unveils Expanded Vison for 900-Foot Skyscraper and Public Plaza at Herald Square Flagship Store – New York Yimby
- ‘We’re Suffering’: How Remote Work Is Killing Manhattan’s Storefronts – NY Times
- Remote work is rough on big retail districts – RetailWire
- Macy’s CEO says recent gains are real and better things are ahead – RetailWire
DISCUSSION QUESTIONS: What do you expect to be the result of Macy’s plan for its NYC Herald Square flagship and the surrounding neighborhood? Is this a wise investment on the part of Macy’s leadership or would it be better off directing these resources elsewhere?