Herald Square Renewal: A Grand, Complex Scheme, Years Away

Herald Square has always been among New York City’s biggest attractions — and one of its biggest missed opportunities.

It’s hectic, messy, has plenty of buses going in all directions, and those makeshift pedestrian areas with tables and chairs seem inadequate considering the pedestrian traffic.

Yet Macy’s bold plan to have an office tower built atop its Herald Square flagship and use the proceeds to renovate the surrounding area, revealed last month, envisions a sweeping change in the atmospherics. The retailer would spend $235 million to upgrade Herald Square’s transit infrastructure and public realm into a modern, pedestrian-friendly and car-free urban space with improved subway and Penn Station access, transit connections and ADA-accessible elevators. The project also intends to ease overcrowding and congestion to create a safer, more inviting open space, and generate $269 million annually in new tax revenues for New York City, support 16,290 annual jobs and spark $4.29 billion in annual economic output.

It’s a plan to unlock the value of the most precious piece of the Macy’s real estate portfolio, consistent with Macy’s redeveloping properties in other major urban sites such as Seattle, as well as in Brooklyn, and it’s key to Macy’s long-term survival. By upgrading the neighborhood, more shoppers would be inclined to frequent Herald Square. The tower would also hold about 5,000 office workers — if fully occupied — which might mean more patrons for Macy’s and other area retailers, though really not much more potential revenue.

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“In many ways, Macy’s Herald Square is the heart of Manhattan and certainly it’s the heart of our brand,” said Chris Erb, head of development for Macy’s Inc. “We want the neighborhood to complement the customer experience of the store. People talk about experiential retail, and for a lot of people that means putting in a bowling alley, a restaurant, or some other non-retail use to draw people in. But for us, it’s about how a person feels when they come to the mall or the store. That feeling doesn’t just stop and start when they walk in and out of the store. It starts when they come from out of the subway or from Penn Station, and includes their experience walking through Herald Square. For many people it may be the only time they get here so it’s really important to figure out a package of improvements that puts that part of the pedestrian experience front and center.”

Accessibility to subways and Penn Station near the flagship, including wheelchairs, is an important component of the project, Erb added.

“This will be a big-time investment and one that we are proud of.”

Macy’s plan calls for a full renovation of Herald Square Park and raising the roads to be even to the sidewalk so there are no curbs, thereby creating the feel of a spacious pedestrian plaza. Broadway from 34th to 36th Streets would be car-free.

No money for the neighborhood upgrades would come from the city or the MTA (Metropolitan Transit Authority.) Macy’s will foot the bill and is working with an extensive team of consultants, including design firm FX Collaborative, on the project.

Macy’s has been negotiating with the city for more than two years on the project. It filed a pre-application statement, as a first step, which sets off the city’s Uniform Land Use Review Procedure, or ULURP, for public review of applications for rezoning. The current zoning at Herald Square does not allow for the construction of a tower, based on the building square footage already on the site. Macy’s Herald Square, including its retail and office space, encompasses 2.1 million square feet.

The Macy’s tower would be 40 stories high, 1.5 million square feet, and rest on a huge steel “tabletop” supported by legs. It would be an independent structure, though it would appear connected for those looking up from the streets. The tower would sit midblock on the building so as to minimize impact to the Broadway façade. Macy’s has yet to announce a developer for the tower.

The flagship would continue to operate while construction on the tower happens, and Macy’s will figure out ways to minimize the impact of the construction on business at the store.

The neighborhood improvements need to be completed before the tower is complete.

“Macy’s is coming forth now with its affirmation of this project but it had been in the planning stages for a number of years. Putting it forward now is significant for the city, the region and for Macy’s itself it’s critically important as we have seen devastation among both small retailers and retail giants,” said Howard Weiss, senior partner and chair of the land use group at Davidoff Hutcher & Citron, and an expert in New York City zoning and economic development. “This opportunity to realize the full potential of real estate and ensuring the future of the Macy’s flagship is extremely auspicious and important.”

The project, Weiss added, “will provide important enhancements in terms of quality of life for those who come to live and work and play” in the Herald Square area.

Weiss estimated that given the magnitude of the Herald Square project, the approval process would take a year and a half to two years to obtain necessary zoning changes before construction could start. ULURP zoning changes are generally a seven-month process, preceded by a prolonged process by a developer working with city planning so the project can be certified by the city. The review process also involves the local community board making a nonbinding recommendation to city planning, and the borough president and mayor weighing in.

“In a project such as this, I believe there will be an initial review and determine there could be substantial environmental impacts that similarly goes through a public review process on a parallel track with the ULURP,” said Weiss.

“There will be a fair amount of controversy, but I do believe Macy’s already anticipates this,” Weiss added. “Macy’s could modify plans to satisfy concerns in terms of pedestrian and vehicular traffic and about local infrastructure. Those typically are raised with projects of this magnitude but typically addressed. Since this is an iconic site it’s less of a gamble. It’s an important investment. The MTA does not have wherewithal to do these improvements. The development of the tower above Macy’s makes it possible.”

Sources close to the project said it could take about five to seven years, putting it in the mid- 2020s, before the tower is built and the neighborhood upgrades completed. “It’s a long haul, certainly from a real estate perspective,” said a source close to the project.

At one time, Macy’s was considering some outdoor space atop its flagship, but that’s not in the current planning. The tower would be purely for offices.

Mark Cohen, director of retail studies and adjunct professor of business at Columbia University, characterized the Herald Square neighborhood as “a very commercial downmarket address because of its traffic and businesses that surround it, as opposed to Hudson Yards and other developments further downtown.”

Cohen sees challenges leasing a tower atop Macy’s in a city where there are plenty of alternatives in more upscale areas and excess space, though Herald Square is a transportation hub.

“There’s a lot of value in Macy’s real estate and every reason to monetize that value. But what about the inside of the store and how it presents itself?” Cohen asked. “It’s an overlarge space of enormous proportion, with no focus, no point of differentiation other than carrying an enormous amount of stuff. It just doesn’t have a point of view and it hasn’t had one for a very long time….The pathway for Macy’s toward long-term success and profitability doesn’t hinge on its ability to monetize its real estate. It hinges on differentiating itself in the eyes of its customers.”

“I’m very positive on the proposal,” said Daniel A. Biederman, president of the 34th Street Partnership, the neighborhood’s BID, or business improvement district. But Biederman added, “I wish more of the money was dedicated to the surface rather than the subway entrances. We have a plan that is quite detailed and that was discussed with Macy’s.” The partnership’s plan would extend out further the park area, with additional planting, lighting and seating.

Still, Biederman said it was smart to build a tower near Penn Station, the subways and Times Square. “It will be good for Macy’s, and good for the city, being right on top of a transit mode.” Also, “Very few people could say light and air would be impeded. The tower will be set back from the facade of Macy’s and there are very few residents in the area. This isn’t as bulky as One Vanderbilt Avenue,” the new 67-floor skyscraper on the corner of Vanderbilt Avenue and 42nd Street near Grand Central Terminal.

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