More than a year after first dropping hints about cashing in on its State Street store, Macy’s is making it official: It’s ready to sell.
The Loop flagship is formally for sale — or, to be more precise, the top half of the building is available to potential buyers or joint venture partners. The deal could generate as much as $130 million for Macy’s at a time when it is slashing costs and closing stores throughout the country.
Macy’s spokeswoman Andrea Schwartz confirmed in an email that the company plans to sell the eighth through the 14th floors of the building, encompassing 700,000 square feet. She did not say how much the company expects the real estate to fetch in a sale.
“Macy’s is continuing to execute on our real estate strategy that is focused on creating value through monetization and, in some cases, redevelopment of our assets,” Schwartz said. “We are still working on a plan for a downsized Macy’s State Street store, which we expect will result in a more vibrant and productive store.”
Upper floors of the more than century-old building could be redeveloped into a new use such as loft offices, apartments or a hotel.
The entire building at 111 N. State St., which includes lower levels connected to Chicago’s underground Pedway system, has more than 1.5 million rentable square feet. The portion that’s for sale is believed to have about 650,000 square feet of rentable space.
The floors are all larger than 100,000 square feet, aside from the 14th floor and an even smaller penthouse.
Cincinnati-based Macy’s plans to continue owning the lower floors, which include retail space and the famed Walnut Room restaurant on the seventh floor.
“Of course we will keep the tradition of the Walnut Room,” Schwartz said.
Macy’s building fills an entire block, bounded by State, Washington and Randolph streets and Wabash Avenue. It was designed by Daniel Burnham, and built in stages in the 1890s and early 1900s.
A partial sale of the old Marshall Field’s building would bring an influx of cash to Macy’s, which is among several old-line retailers fighting to stay afloat in today’s e-commerce world. The 158-year-old firm is in the process of closing 100 stores nationally.
Macy’s could put some proceeds from a State Street sale toward a much-needed refresh of the Loop store.
A team of Eastdil Secured brokers, led by Chicago-based senior managing director Stephen Livaditis, is advising Macy’s in the sale.
If a sale is completed, the deal would require dividing up the building and creating a separate entrance with access to elevators leading to the top floors.
Other unique older buildings with wide floors, such as the Merchandise Mart, the former Apparel Center and the Sullivan Center, have become popular office destinations in recent years among tech and creative firms.
Some familiar faces in Chicago could be candidates to acquire the Macy’s space.
Sterling Bay, a Chicago developer whose projects include McDonald’s future headquarters, under construction west of the Kennedy Expressway, bought five floors of a Portland, Ore., building from Macy’s in 2016. New York-based 601W, which owns Chicago properties including the old main post office, Aon Center and Prudential Plaza, earlier this year bought a Macy’s in Minneapolis that closed. Both developers plan to convert the former Macy’s spaces into creative offices.
Macy’s efforts to carve up the Loop building bring some long-awaited clarity regarding its plans.
The department store chain’s first public mention of a potential sale came in November 2015, saying it was considering a development partner or “other deal structures,” which was thought to mean a partial sale of the building or an outright sale with a lease-back of the retail space.
In February, Chief Financial Officer Karen Hoguet told analysts Macy’s was focusing on a plan to downsize its Loop store to make it “a more vibrant, more productive store.” At that time, Hoguet said a Chicago deal likely would be similar to a 2015 transaction in Seattle in which it sold the top four floors of a store to a developer that is converting the space to offices.
Macy’s previously said it uses lower levels and the first through eighth floors for selling, with higher floors used for functions such as an annual flower show, Macy’s regional offices, private events and storage.
The Walnut Room was the first restaurant to open in a department store, going into the seventh floor of Marshall Field’s in 1907. The wood-paneled restaurant’s 45-foot-tall Christmas tree attracts large crowds in the winter.
Some Chicagoans still refer to the department store as Marshall Field’s. Macy’s acquired the beloved brand in 2005, creating a backlash locally.
rori@chicagotribune.com
Twitter @Ryan_Ori
