Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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T H E C O M M O N A R E A N E W S F R O M A L L C O R N E R S O F T H E S H O P P I N G C E N T E R I N D U S T RY 6 S C T / J A N U A R Y 2 0 1 6 Macy's Inc. is working with more developers to profit from its underused real estate holdings. The retailer is also planning to ex- pand its off-price Macy's Backstage concept and beauty chain Blue- mercury as it trims its portfolio of underperforming department stores in coming years, executives said. Macy's Inc. is working with New York City–based developer Tish- man Speyer to identify and advance potential store redevelopment projects nationwide. Macy's is expanding on its existing relationship with Tishman on the redevelopment of its store in downtown Brook- lyn, N.Y. Macy's said it is also considering joint ventures or other deal structures with third parties to redevelop Macy's flagship real estate assets on Herald Square in Manhattan; Union Square in San Francisco; State Street in Chicago; and Nicollet Mall in Minneapolis. Macy's says it could start looking for ways to make more money off its owned mall-based properties too, to the extent that opportunities become available. The company says it will continue to pursue selected real estate dispositions and monetize assets in instances where retail sales are simultaneously enhanced, such as the recently announced real estate sales of underutilized portions of properties in Brooklyn and downtown Seattle or where the value of real estate significantly outweighs the value of the retail business, such as the recent sale of Macy's stores in Cupertino and downtown Pittsburgh. Macy's said it has decided not to pursue the formation of a REIT at this time. The board of directors has concluded that a REIT does not offer sufficient upside potential for value creation. Sales were disappointing in the third quarter, with comps falling by 3.9 percent. "Spending by domestic customers remained tepid, especially in key apparel and accessory categories. Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy's and Bloomingdale's stores in tourist centers, which are some of our company's largest-volume and most profitable locations," said Terry J. Lundgren, chairman and CEO, in a press release. To reverse the sales slide, Macy's plans on push- ing more omni-channel initiatives, Lundgren said. In early 2016 the company will be closing 35 or 40 of its current portfolio of about 800 Macy's and Bloomingdale's stores. But over the next two years, the company will roll out about 50 freestanding Macy's Backstage stores in off-mall locations, building on the pilot launch this fall. In addition, in spring 2016 the company will pilot Backstage stores within up to 10 existing Macy's store locations, creating a new hybrid store that combines the bargain hunt milieu of the Macy's Backstage concept with the customer service of the full-line Macy's department store. Macy's will also open 40 addi- tional Bluemercury self-standing beauty specialty stores, bringing the total store base to approximately 115 by the end of 2017, while also integrating Bluemercury shops into the beauty departments of Macy's stores. Macy's, landlords team to remake stores