Retail Detail: Department Store Smackdown: Macys vs JcPenney. Second City Style Fashion Blog

Fountain of 30

April 13, 2007 • Shopping

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When the big retail controversey in NYC is Macy’s versus J.C. Penney’s you know the world is going to hell in a handbasket, or handbag. Either way, it’s really ugly. See Sharon Edelson’s article in today’s WWD for the sad scoop. By Sharon Edelson NEW YORK — Myron E. Ullman 3rd could be taking J.C. Penney Co.’s battle with Federated Department Stores right to Macy’s home turf, the 34th Street corridor. In a move that would reshape New York retailing, sources said Penney’s is close to a deal for major space in the Manhattan Mall — one block from Macy’s lucrative Herald Square flagship, which is said to generate about $650 million to $675 million in annual volume. Penney’s, which has stores in every New York borough except Manhattan, has been trying to find a location in the city for some time. The company is in growth mode, opening about 50 stores a year. A Penney’s spokesman declined comment Thursday, and sources stressed a deal could still fall apart. Manhattan Mall, a 1 million-square-foot, mixed-use building located on Sixth Avenue between 32nd and 33rd Streets, has 164,000 square feet of retail space on four levels. About 812,000 square feet of office space is occupied mainly by Bank of America and Interpublic Group. Vornado Realty Trust bought Manhattan Mall from Argent for $689 million in November. While the mall is populated largely by moderate retailers and has a somewhat difficult floor plan and garish decor, the stores are highly productive. With about 60 retailers, the mall does about $900 to $1,000 in sales per square foot, Mark Teitelbaum, chief operating officer of Argent Ventures, said in November. The mall’s rents average over $150 a square foot. Its sales per square foot make the mall more productive than some of the top centers in the U.S. Taubman Centers Inc.’s portfolio of malls registers the highest sales per square foot in the industry, averaging $508 in 2005, although that figure includes department store anchors, which generate lower sales and bring down the average. One of the most successful centers, the Forum Shops at Caesars Palace in Las Vegas, generates sales of $1,400 per square foot. It could not be learned what space Penney’s would occupy in the Manhattan Mall. There are no large vacancies, but real estate sources said most tenants have relocation clauses in their leases, which means they could be forced to move. Steve & Barry’s is the largest tenant, with 27,000 square feet. There is about 10,000 square feet of space available on the second level and possibly 3,500 square feet on the main floor, a source with knowledge of the mall said. –Joanne Molina for Second City Style

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