The Lord & Taylor flagship store on Manhattan’s Fifth Avenue may get smaller under its new owners.

NRDC Equity Partners LLC – which agreed yesterday to acquire the 48-store Lord & Taylor chain from Federated Department Stores Inc. for nearly $1.2 billion in cash – may scale back the square footage allotted for retailing at the flagship store, said Richard Baker, president of NRDC Equity Partners.

The Fifth Avenue flagship is located at 38th Street, which is 15 to 20 blocks south of the heart of Fifth Avenue’s luxury district that’s home to the famous flagship stores of Tiffany & Co., Saks Inc.’s Saks Fifth Avenue Store, and Neiman Marcus Group Inc.’s Bergdorf Goodman department store.

Nevertheless, the 12-story Midtown location is “a phenomenal piece of real estate” and currently occupies more than 600,000 feet, Mr. Baker noted. The flagship location has been valued between $500 and $850 a square foot, and Mr. Baker said it’s possible that the space allotted for Lord & Taylor’s retail operations might be downsized to make room for other uses.

“Should they operate out of 500,000 square feet? 200,000? 300,000? Anything could happen,” Mr. Baker said in an interview.

Lord & Taylor’s sales a square foot for years have lagged those of competitors Nordstrom Inc. and Neiman Marcus, said Stevan Buxbaum, executive vice president of Buxbaum Group, a Calabasas, Calif., consultant. A downsized flagship with well-edited merchandise could help fix that, Mr. Buxbaum said. Lord & Taylor also has the option to move administrative offices out of the flagship to less expensive locations, he said.

Federated spokesman Jim Sluzewski declined to comment on what portion of the building is occupied by non-retailing operations but confirmed that the building houses offices for “executives, merchants, human resources, marketing – that sort of thing.”

As for the rest of the Lord & Taylor chain, NRDC’s Mr. Baker said there may be some shuffling of the locations, which are located mainly in the Northeast.

“We are going to analyze what our options are for both new stores and relocating existing stores,” Mr. Baker said. He declined, however, to comment on whether the firm sees significant growth potential for Lord & Taylor.

The sale, which includes 48 Lord & Taylor stores and a distribution center in Wilkes-Barre, Pa., is expected to close in the third quarter, pending regulatory approvals. Federated will continue to operate all Lord & Taylor stores and facilities until NRDC Equity Partners takes ownership.

NRDC Equity Partners is a partnership between principals of private-equity firm Apollo Real Estate Advisors L.P. and principals of National Realty & Development Corp. of Purchase, N.Y., a developer and property manager that teamed up with Apollo Management L.P. of New York to purchase Linens “N Things Inc. (LIN) in February for $1.3 billion.