FAO Schwarz may vacate its iconic flagship toy store on Fifth Avenue after almost three decades at the location, according to real- estate brokers.
Toys “R” Us, the parent company of FAO Schwarz, hired CBRE Group to market about 60,000 square feet at the base of the General Motors Building for sublease, brokers from two competing firms said Thursday. The store, a tourist magnet on one of the world’s priciest retail corridors, has been home to the retailer since it moved from across the street in 1986.
FAO Schwarz no longer needs such a large location, said Faith Hope Consolo, chair of the retail group at Douglas Elliman Real Estate in Manhattan. By subleasing the space, the company also may be looking to take advantage of the area’s surging retail rents, which have risen almost 22 percent from a year ago, according to real-estate brokerage Cushman & Wakefield.
“Yes, it’s beautiful, it’s a landmark,” said Consolo, who brokered the deal that put the store into the space. “But Toys ‘R’ Us already has that big presence in Times Square, and they can have a smaller venue. Now that the building has been through three ownerships and changed the dynamic, it’s time for them to move on. They don’t need to be there.”
Boston Properties Inc., the biggest US office real-estate investment trust, has been majority owner of the GM Building since 2008. M. Safra & Co. and the family of Chinese real-estate developer Zhang Xin earlier this year bought a 40 percent stake in the 50-story white stone tower, which sits at the southeast corner of Central Park.
FAO Schwarz is on the same plaza as Apple’s “cube” store, which draws tourists from all over the world to shop and view its 32-foot glass entryway. In the past year, CBS shuttered a TV studio opposite FAO Schwarz. That space has been in part leased to the jeweler Cartier.
Rents in the Fifth Avenue retail area averaged $2,513 a square foot in the third quarter, up from $2,067 a year earlier, according to a report Thursday from Cushman & Wakefield. The FAO space was “recently put on the market for sublease,” said Alan Schmerzler, an executive director at Cushman & Wakefield.
Toys “R” Us spokeswoman Kathleen Waugh said the company’s lease expires in 2017.
“Over the next four years, we will evaluate our lease-renewal options,” she said in an e-mail. “Part of evaluating our lease-renewal options could include looking for potential tenants to sublease the space.”
Arista Joyner, a Boston Properties spokeswoman, didn’t return a telephone call. Phil Russo, a CBRE spokesman, declined to comment.
FAO Schwarz has had a New York presence for about 150 years.
The store is home to the giant piano on which Tom Hanks danced in the movie “Big.” It also features a candy shop known as FAO Schweetz and the Muppet Whatnot Workshop.