Grand Buildings Help Keep Macy’s Afloat

The company’s real estate is now worth more than its market value.

The flagship Macy’s store, on New York’s Herald Square, in the early 1900s.CreditLibrary of Congress

The Macy’s Thanksgiving Day Parade is an indelible and durable holiday tradition. But the company that has sponsored the annual parade for nearly a century is being tested like the SpongeBob balloon in a strong wind.

Battered by e-commerce competition, Macy’s sales have fallen for 11 consecutive quarters, and its stock price has plunged about 41 percent this year alone.

The Thanksgiving parade in 1948.CreditMeyer Liebowitz/The New York Times

Shoppers and investors seem to agree that the magic of the department store has faded in this era of instant online gratification and free home delivery. It is not a fate unique to Macy’s, as other bricks-and-mortar retailers scramble to adjust to the whims of American shoppers.

What Macy’s does have going for it is real estate — a vast network of more than 600 stores across the country. Macy’s real estate, with an estimated value of $16 billion, is worth more than the company’s market value of $6.4 billion, according to an analysis by Cowen, the investment management and banking firm.

Many of its oldest stores are a developer’s dream — soaring spaces with ornate exteriors in the heart of major American cities.

The Macy’s in downtown Philadelphia in 2009. The location features a pipe organ named after the original store in the building, Wanamaker’s.CreditRay Stubblebine/Reuters

“By any metric, there is a lot of value,” said Oliver Chen, a retail analyst at Cowen.

The Macy’s flagship store on 34th Street is worth an estimated $3.3 billion alone. The company has no plans to sell its Manhattan flagship, a tourist magnet that contains more than one million square feet of retail space, and spent $400 million on renovating it between 2012 and 2016.

Some analysts, though, say that what for many years was the “world’s largest store” doesn’t have to be so large and have suggested that the company redevelop some of the upper floors.

A floor of Macy’s flagship store after a redesign by Charles Sparks & Company several years ago.CreditCharlie Mayer

In other cities, Macy’s has already been selling off parts or all of its most distinct buildings. One of them, a former Meier & Frank department store in Portland, Ore., will soon house “creative” office space with a coffee shop and a gym.

The Meier & Frank building in Portland, Ore.,…

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