Macy's, Tishman Speyer Enter $270 Million Deal to Remake Historic Downtown Brooklyn Store

Photo by Nicholas Strini for PropertyShark

Downtown Brooklyn will soon get a thoroughly modern Macy’s. The department store and commercial real estate firm Tishman Speyer announced a $270,000,000 deal Wednesday that will let Macy’s downsize, remodel and take cash out of its antiquated real estate holdings downtown.

Thankfully, the historic building at 422 Fulton Street will not be sporting a giant condo tower on its roof anytime soon. And Macy’s will continue to own and operate the first four floors and the lower level as a store.

Tishman Speyer will acquire the top five floors of the building. It plans to add five more floors above that, the company said in a press release, although the building is already over FAR, according to PropertyShark.

The plan is to turn it into “architecturally distinct, headquarters quality” office space for “today’s creative workers and new economy companies,” in the words of Tishman Speyer. It also owns the Chrysler Building and Rockefeller Center.

The company is also buying the Macy’s parking facility at 11 Hoyt Street as part of the deal. Plans for that have not yet been decided, but it could potentially become a mixed-use development.

Tishman Speyer will pay Macy’s $170,000,000 in cash up front for the real estate, as well as an additional $100,000,000 towards Macy’s renovation over the next three years.

A little backstory: The 19th century building at 422 Fulton Street initially housed classic Brooklyn department store Abraham & Straus, founded in 1865. The building got an addition and an Art Deco overhaul in 1930. Eventually, it became Macy’s Downtown Brooklyn store.

The building is not landmarked, but Macy’s said it will preserve “key architectural elements of the exterior of the building.”

Macy’s said it is “reinventing” the store “to create a fashion hub serving neighborhoods from Dumbo to Manhattan Beach.” It will include a Starbuck’s on Fulton Street.

Construction on both parts will start in spring 2016 and wrap in fall 2018. The store will remain open the entire time, and no Macy’s workers will be laid off.

1930 photo via Museum of the City of New York

Macy’s chairman and chief executive officer Terry J. Lundgren expressed that he felt the change will represent progress for the area, saying, “Brooklyn has emerged as one of the most dynamic, diverse and vibrant communities in America. This is a place we know well and have served with a highly successful downtown store on Fulton Street since 1865. In recent years, it has become clear that our Fulton Street store requires major improvements in order to serve the Brooklyn of today, as well as future generations of customers.”

By “the Brooklyn of today,” Lundgren is likely referring to Brooklyn’s more luxury-oriented newcomers.

Fulton Mall has had a long history, first as a destination serving a wide variety of customers and, more recently, as a working-class people’s mall. The downsizing of Macy’s and addition of new, higher-priced retail will certainly change the face of what has long been an anchor building in the area.

Downtown Brooklyn is no newcomer to gentrification; its skyline has seen a great deal of development in recent years. A massive amount of new units and commercial space has been built in the area in just the past decade.

The 1.8-million-square-foot City Point mall and towers are under construction down the street, and the tallest tower in Brooklyn may soon be going up nearby.

More reading on Macy’s and the Fulton Mall:

The Macy’s Redevelopment in Downtown Brooklyn Could Look Like This [Brownstoner]
Macy’s Shopping Around Brooklyn Properties, Requests Proposals [Brownstoner]
Brooklyn Macy’s Could Become Apartments [Brownstoner]
Macy’s Coverage [Brownstoner]
Fulton Mall Coverage [Brownstoner]