The giant stuffed animals won’t be leaving Fifth Avenue after all.
FAO Schwarz has renewed its lease at Boston Properties’ GM Building for five years, ending speculation that the fabled retailer, now owned by Toys ‘R’ Us, might leave when its lease ends early next year.
Cushman & Wakefield’s Bradley Mendelson, the building’s agent, confirmed that FAO Schwarz had exercised its renewal option. Two years ago, my colleague Lois Weiss reported that Boston was looking for a higher-paying tenant, and that Schwarz might move to a smaller space in Midtown.
Sources said Mendelson’s team quietly talked to other prospective users if Schwarz decided not to renew. A source said the renewal terms, which were not available, were worked out through a “fair-market value” arbitration under a protocol set up in the store’s original lease. At that time, the tower was owned by Conseco and Donald Trump and Schwarz was still an independent company.
Toys ‘R’ Us, meanwhile, is still expected to go public after several times scheduling and then postponing an IPO date.
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Here’s a boost for the Financial District’s anemic food-shopping scene: A cramped, tiny Key Foods store will soon give way to a nearly 30,000-square-foot Key Foods supermarket.
The new, three-level store at 55 Fulton St., to open next year, will be almost 10 times larger than the gloomy old one at 77 Fulton St.
While not as glamorous as the Whole Foods at 177 Warren St., on FiDi’s northwest frontier, the Key Foods lease might be more meaningful, bringing a full-line food store into the district’s heart.
Both the old and new Key locations are part of the Mitchell-Lama apartment complex known as Southbridge Towers. The currently vacant 55 Fulton address comprises an entire small building previously occupied by Foot Locker and Burger King. The landlord was repped by CB Richard Ellis’s David LaPierre, Richard Hodos, Steve Sjurset and Sean Moran. Key Foods was repped by Bloom Real Estate Group.
LaPierre said the asking rent was $1.5 million a year, but declined to say what the lease was actually worth.
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The Key Foods lease, and the mostly schlocky state of Fulton Street, raise a question, namely:
When is a downtown “retail revival” something less? When it’s based on cheerful pronouncements of rising rents by brokers and the Real Estate Board of New York.
Brokers view things in terms of opportunities for commissions. But most residents south of Chambers Street and the Brooklyn Bridge know the city’s fastest-growing residential neighborhood remains poorly served by stores and restaurants.
The district’s historic heart is particularly bereft of the kinds of midpriced shopping and dining options that residents and office workers have a right to expect.
While Tiffany and Hermes draw disproportionate attention, narrow old streets, including Nassau, Fulton, William, Ann and Gold, are dominated by low-end fast food, junk and convenience stores.
A New York Times column last week cited dramatic hikes in asking rents along Broadway as evidence of a “revival.” Absurdly, in some quarters the closing of the huge former Borders is regarded as a boon because the space might appeal to a popular apparel purveyor like H&M or Topshop.
They indeed would be welcome. But losing the 32,000-square-foot Borders can’t be good news for residents or for merchants on Broadway nearby, which is mostly dead after dark.
And, based on recent trends, Walgreens might seem just as likely a candidate for the space. After all, Duane Reade, owned by Walgreens, just opened its largest store at Donald Trump’s 40 Wall St.
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Digital marketing powerhouse 24/7 Real Media is doubling its space at 132 W. 31st St. — but the deal didn’t come easily. The WPP-owned company will grow to 100,000 square feet via a complex transaction that included extending a direct lease, converting a sublease to direct and signing a new lease for two more floors.
Cushman & Wakefield’s Mitch Arkin and John Picco repped landlord C and K and CB Richard Ellis’s Greg Tosko repped the tenant. Sources said the agreement was struck last November, but was held up over issues raised by special servicer LNR, although the building was not in default.
A source said C and K’s principals “went through six months of torture” explaining the complex deal to LNR and the building’s lenders — a common problem at properties in special servicing.
The source said 24/7 had an option to get out of the deal until April 30 if bank approval didn’t come through — which it finally did on April 28.
The new leases are now all direct and coterminous in 2017. Asking rents at the address run from the mid-high $40s per square foot.
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Plaza Construction, one of the city’s largest contractors, is moving its US headquarters to 1065 Sixth Ave. The company took 35,000 square feet on the en tire seventh floor, relocating this month from 260 Madison Ave.
“We wanted to occupy a building with floor plates conducive to an open-plan design in order to facilitate collaboration,” said Plaza Construction president Richard Wood. Asking rents at 1065 Sixth are $49 per square foot.