Macy’s Herald Square realty project faces tough road ahead

Bloomberg

Macy’s Inc faces a difficult road as it dives into New York City real estate development.
The struggling retailer, trying to generate cash off prime real estate in midtown Manhattan, recently unveiled plans for a 1.5 million-square-foot building atop its iconic store in Manhattan’s Herald Square. But the proposed office tower requires zoning changes that have to be approved by the city, a potentially thorny political process that can delay, or even quash, the project.
“There are projects on individual buildings that have been going on for decades because of political issues,” said Noah Kazis, a legal fellow
at NYU’s Furman Center. “Whether you move relatively quickly or get dragged out for years and years and years — that’s the question about the politics of this project.”
The plan for the real estate development came to light last April, when Bloomberg News reported that the company had floated plans for a 1.2 million-square-foot tower in
preliminary talks with city officials. At the time, a source familiar with the discussions said Macy’s would probably push for zoning changes to allow for an 800-foot building.
Macy’s declined to comment for this story. The city council had “periodic” discussions with Macy’s about the project last year but was not briefed before the plan was unveiled recently, according to a city council spokesman.
Lining up political support could be key for Macy’s, which is looking to the real estate project to help assuage investor concerns.
Macy’s CEO Jeff Gennette has acknowledged that the company proposed a “massive project” that would include making improvements around Herald Square, but declined to share specifics about discussions with the city.