Rent decline may be the real miracle on 34th street
In this May 16, 2017 Mann Report column, Debra Hazel examines how major department store owners along the 34th Street corridor are working to unlock the value of their prime Manhattan real estate.
As traditional retail faces continued pressure from e-commerce, companies such as Hudson’s Bay Co. and Macy’s are exploring large-scale mixed-use development above their flagship stores. Proposed projects include office space, residential units, and hotel towers, reflecting a broader strategy to diversify revenue beyond retail operations. Hudson’s Bay has formed joint ventures to monetize dozens of properties, while Macy’s retained Brookfield Asset Management to develop plans for approximately 50 owned and leased sites.
The article also outlines a larger trend of retailers separating or leveraging their real estate assets. Hedge funds have encouraged companies like Macy’s to spin off property holdings, with some valuations suggesting the real estate may be worth more than the retail business itself. Similar strategies have been pursued by Sears and others through REIT transactions and asset sales.
At the same time, 34th Street continues to evolve at the street level. Target announced a smaller format store near Penn Station, and brands such as QVC, HSN, and Amazon have explored physical retail locations in the area. With retailers like bebe closing stores and asking rents declining, Herald Square may be entering a period of repositioning and renewed opportunity.
Read the full article here:
https://www.mannpublications.com/mannreport/2017/05/16/looking-up-the-value-of-herald-square/