Macy's is Unloading a Bunch of Real Estate

With mall traffic declining steadily, department store giantMacy's is looking to downsize to a more defensible footprint. Back in August, the company announced plans to close about 100 stores. Last week, it identified about two-thirds of the locations that will be shuttered. Most of those will close within the next few months.

The main goal of closing stores is that it will better align Macy's brick-and-mortar footprint with consumer shopping trends. However, a secondary benefit is that these store closures will free up a lot of excess real estate that Macy's can sell. That process has already begun and is likely to continue at a rapid pace this year.

Stores aren't all equal

The quality of Macy's real estate spans a wide range. At one end of the spectrum, Macy's sprawling flagship store in Manhattan is probably worth billions of dollars. At the other end, Macy's owns some stores in dead or dying malls that are virtually worthless. For example, it recently unloaded one store in Springfield, Ohio, for the paltry sum of $200,000.

A few of the stores that Macy's is closing this year are getting the ax specifically because they are sitting on valuable real estate. Selling these will generate the vast majority of Macy's real estate proceeds. On the other hand, most of the stores slated for closure are located in subpar malls and thus aren't worth very much.

Macy's starts selling its downtown real estate

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