Could Macy's Shrink Its Herald Square Flagship, Too?

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Earlier this month, Macy's unveiled a big shake-up for its beleaguered Downtown Brooklyn store, which includes compressing the sale space down from nine floors to five and selling off the upper levels as office space. And as the department store plans to spin off its real estate holdings into a separate company, some are saying that the Herald Square flagship would benefit from a similar plan.

"There is clearly impressive potential," Cowen & Co senior real estate analyst James Sullivan told the Wall Street Journal. "That is the path to the highest value creation for the Herald Square store." Of the 556 stores that Macy's owns, Herald Square is clearly its most valuable property, taking up an entire city block in the middle of Manhattan for 1.1 million square feet of retail space, not to mention the prestige that comes along with being the destination for its Thanksgiving Day parade.

But just how much it's worth is up in the air: Estimates vary widely from under $3 billion to more than $4 billion. "The real answer is, we don't know," Macy's spokesperson Jim Sluzewski told the paper, "and that's why we have teams of people looking at the question."

Space at Herald Square that currently serves as company offices and storage could be converted to condominiums and hotels, some analysts suggest, and that would drive up its worth even further. "Often, there's additional value that can be gained from having those primary locations," according to Forrester Research retail analyst Adam Silverman.

Nothing is set in stone yet, so for now customers can enjoy the flagship's revamped look, which includes everything from black leather tote bags to blowouts.