Lord & Taylor was acquired yesterday for $1.2 billion by Apollo Real Estate advisors and NRDC Equity from Federated Department Stores and one of the new owners has indicated that the chain?s flagship store on the northwest corner of Fifth Avenue and 38th Street may be reduced in size.

Samuel Lord and his wife?s cousin, George Washington Taylor, founded the company in 1826 and it became the first major department store on Fifth Avenue, the first to present Christmas holiday displays in its storefront windows rather than merchandize, and the first to open a branch in the suburbs.

It was a founding member in 1916 of the American Dry Goods Co., which would become Associated Dry Goods Corp., which was acquired in 1986 by the May Company. May was acquired by Federated last year.

In 1945, Dorothy Shaver was named as president of the store and she would soon introduce ?personal shoppers.?

An article by Michael Barbaro in today?s edition of The New York Times quoted Richard A. Baker, president of NRDC Equity Partners as declaring he ?was not sure we want to operate Lord & Taylor without a Fifth Avenue location.? NRDC has recently also acquired Burlington Coat Factory, Toys ?R? Us and Pathmark. Lord & Taylor now has 47 stories in addition to its Fifth Avenue building, which is notable for its huge cornice and its very large rooftop terrace for its employee?s cafeteria. The building has more than 600,000 square feet of space.

?Should they operate out of 500,000 square feet? 200,000? 300,000? Anything could happen,? Mr. Baker was quoted as saying in an article in today?s New York Sun by James Covert.

An article by Suzanne Kapner in today's edition of The New York Post said that "one likely possibility, analysts said, would convert a portion of the Fifth Avenue store into luxury condominiums."

There has been a recent flurry of new residential construction activity on Fifth Avenue south of 42nd Street. The former Rogers Peet building at 485 Fifth Avenue at 41st Street, a smaller but similar building to Lord & Taylor?s, is being converted to condos. A tall condo tower designed by Michael Graves opened directly across from the store a couple of years ago, a major development site has been cleared two blocks to the south at 400 Fifth Avenue, a 40-story glass residential tower is nearing completion at 325 Fifth Avenue and plans are advancing for a 19-story residential tower at 241 Fifth Avenue and many buildings around Madison Square Park are in the process of conversion from commercial to residential uses.

Historically, Lord & Taylor was for many decades one of the city?s most prestigious stores competing directly with Bonwit Teller?s, which was demolished for Trump Tower, and Saks Fifth Avenue. In more recent years, it concentrated less on trendy fashion and more on traditional and moderately priced clothing and accessories.