Office Tenants Are Finding New Homes On The Upper Floors Of Big-Box Retailers
As retailers work to reinvent themselves amid a shifting environment, it is presenting new opportunities for office occupiers.
In response to the rise of e-commerce, increased pressure from activist investors and the overbuilt state of the sector, large-format retailers are starting to shrink their footprint in an effort to cut costs and monetize real estate. While many of these big-box players still want to operate on main floors where shoppers can easily view and purchase products, the need to showcase items on higher levels has decreased. This shift has left available space for new offices and co-working companies on the upper floors of retail centers, the Wall Street Journal reports.
In October, co-working giant WeWork purchased the 103-year-old Lord & Taylor flagship building in Manhattan with the intention of turning it into its headquarters. Lord & Taylor will continue to operate on the first three floors while WeWork uses the top eight floors for its own staff and services.
Similarly, a Macy's building in Brooklyn is being redeveloped by Tishman Speyer. The top four floors will soon be converted from its former use as a department store to new office spaces, the WSJ reports.
Normandy Real Estate Partners also recently closed on the ABC Carpet & Home building in Manhattan for $133M with plans to invest another $40M to convert part of the previous retail space into office units. ABC is still operating but chose to continue operating on the ground floor, mezzanine and second floor with the addition of restaurants on its lower level to offer customers a new type of experience.