Macy’s has struck a preliminary deal to sell the top half of its State Street flagship building to a Canadian real estate investor that plans to convert the space into offices.
Toronto-based Brookfield Asset Management, one of the world’s largest real estate owners, has agreed to buy floors 8 through 14 from Macy’s, according to sources. The deal for approximately 700,000 square feet has not been finalized.
If the State Street deal is completed as expected, it would continue the Cincinnati-based retailer’s strategy to sell properties and form joint ventures with developers to cash in on the value of its vast real estate portfolio. The real estate deals come as Macy’s and other generations-old retailers fight to stay relevant in today’s e-commerce economy.
The sale price could not be determined, and a Macy’s spokeswoman declined to comment. A Brookfield spokesman declined to comment.
The former Marshall Field’s building, designed by Daniel Burnham, was built in stages in the late 1800s and early 1900s. The building takes up an entire block, bounded by State, Washington and Randolph streets and Wabash Avenue.
In April, Macy’s confirmed it had hired a team of Eastdil Secured brokers, led by Chicago-based managing director Stephen Livaditis, to market the property for sale. “We are working on a plan for a downsized Macy’s State Street store, which we expect will result in a more vibrant and productive store,” spokeswoman Andrea Schwartz said at the time.
Brookfield is expected to convert the top seven floors into loft offices, which would be accessed via a newly created lobby.
Macy’s will continue to own and operate retail space on the lower half of the building, including the Walnut Room on the seventh floor. The restaurant opened in 1907 in the Marshall Field’s department store, and its 45-foot-tall Christmas tree is a holiday attraction.
Brookfield previously has owned Chicago office buildings, but not in recent years.
The investment manager has USD 250 billion worth of real estate and other assets under management worldwide. Brookfield owns real estate throughout the world, including the 8 million-square-foot Brookfield Place office and retail complex in New York.
In November 2016, Macy’s said it had formed a partnership with Brookfield to redevelop as many as 50 Macy’s properties. The Chicago deal is believed to be separate from that agreement.
Macy’s State Street store is seen in April in downtown Chicago. The department store chain has a preliminary deal to sell the top half of the building, floors 8 through 14