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June 24 (Bloomberg) -- Restaurateur Danny Meyer plans to relocate Manhattan’s Union Square Cafe from its 30-year home after lease negotiations ended without an agreement.

The restaurant will close when its lease at 21 E. 16th St. expires at the end of 2015, said Jee Won Park, a spokeswoman for Meyer’s Union Square Hospitality Group. Talks between Meyer and the property’s landlord, Ari Ellis, broke down because of a disagreement about the rent, Ellis said in an interview.

The restaurant, which debuted in 1985 in what was still largely a rundown neighborhood, was the first for Meyer, who later started the Shake Shack burger chain. Union Square Cafe is the latest downtown dining establishment forced to shut down amid Manhattan’s soaring real estate values. Two weeks ago, wd~50, opened in 2003 by chef Wylie Dufresne, said it would close because a developer has plans for a new building on the Lower East Side site.

Meyer’s company will seek a new location nearby for the Union Square Cafe, according to Park.

“Right now, we are looking to stay in the neighborhood,” she said in an interview. “At this time, we are not looking to change the name or concept.”

Ellis -- whose company, David Ellis Real Estate, owns four other buildings in areas including the Meatpacking District and Midtown -- said that while he hopes the two sides will come to an agreement before the lease ends, Meyer might have outgrown the space.

‘Quirky Spaces’

“All the great restaurateurs are leaving their small, quirky spaces and moving into these mega restaurants,” Ellis said. “They’ve moved past these sort of things and they can move into essentially any space they want, and to a large extent, have them built for them, which is wonderful for them but not so great for me, or the neighborhood.”

In the area that includes Union Square, retail asking rents increased 5 percent in the first quarter from a year earlier as more high-end businesses were drawn to the neighborhood, according to a report by Cushman & Wakefield Inc.

When Meyer opened Union Square Cafe, his rent was $48,000 annually, according to the New York Times, which reported the planned closing on its website late yesterday. RKF, the brokerage marketing the space, is seeking $650,000 a year from the next tenant, the newspaper reported.

Jacqueline Hlavenka, a spokeswoman for RKF with Rubenstein Associates, declined to comment on the property. Meyer is traveling and unavailable to comment, Park said.

Ellis said demand for the space will be high because of its long association with Union Square Cafe.

“The numbers that come in for a restaurant for that space will be as good as or better than I projected,” Ellis said. “The restaurant that comes in, if I’m lucky, will be a great operator like Danny, will be successful, and they’ll be there for another 30 years. If it’s not Danny, which I hope it is.”

The Shake Shack chain opened its 48th location yesterday in Washington’s Union Station.

To contact the reporter on this story: Jonathan Lamantia in New York at

To contact the editors responsible for this story: Kara Wetzel at Christine Maurus

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