Toys ‘R’ Us to Leave Flagship Times Square StoreDavid M. Levitt
Toys “R” Us Inc., the world’s largest toy chain, plans to leave its flagship store in New York’s Times Square early next year as it faces an expected rent increase.
The 110,000-square-foot (10,200-square-meter) store at 1514 Broadway, famed for its indoor Ferris wheel and mechanical Tyrannosaurus rex dinosaur, is too large for any single tenant, said C. Bradley Mendelson, vice chairman at Cushman & Wakefield Inc., who is handling leasing for building owner Bow Tie Partners. The landlord plans to break up the space, Mendelson said.
“The configuration of space is just too expensive for any one tenant,” Mendelson said in a phone interview. “Market rates have changed substantially. It has nothing to do with Toys’ ability. Toys has been a very good tenant for the last 15, 16 years.”
The move reflects rapid rent growth in the Times Square “bow tie” -- the blocks immediately surrounding the area where Broadway and Seventh Avenue cross, often called the crossroads of the world. Retailers clamoring for access to the square’s tourist traffic have been driving rents higher.
Rates for ground-floor retail space in the bow tie area averaged $2,317 a square foot in late 2014, higher than anywhere in Manhattan except for Fifth Avenue between 49th and 59th streets, according to a report by the Real Estate Board of New York. Three years earlier, the average was $1,433 a square foot.
Toys “R” Us has been “a proud resident of Times Square since our international flagship store opened there,” Linda Connors, a spokeswoman for the company, said in an e-mailed statement. “The lease for our store in Times Square expires in 2016 and, as previously noted, we have been reviewing our lease renewal options. We have not signed a lease agreement for a new location, and any rumors regarding this ongoing process are just that.”
The toy merchant’s 21,000-square-foot ground floor is being marketed for $2,500 a square foot, its second-floor space for $350 a square foot, and the lower level for $150 a square foot, Mendelson said. There are four other retail tenants in the 150,000-square-foot building: Foot Locker and Swatch stores, a Starbucks coffee shop and the Bond 45 restaurant. Their leases all expire in February, the same time as Toys “R” Us, he said.
Toys “R” Us may relocate to the retail storefronts across the square at the Marriott Marquis Hotel, where Vornado Realty Trust controls the retail portion of the property, according to the Commercial Observer, which reported the retailer’s move Tuesday. Vornado, which owns a stake in the toy retailer, has installed Times Square’s largest digital advertising sign above its stores.
About 43,000 square feet of retail space is immediately available at the hotel, according to Vornado’s website.
Wendi Kopsick, a Vornado spokeswoman, said the company would have no comment.
The model dinosaur and Ferris wheel are Toys “R” Us property, and could be used at its new store “wherever that may be,” Mendelson said.
While there had been discussions with Toys “R” Us about taking less space, “there is nothing ongoing right now” with the retailer, he said.
The Times Square store was a staging area for national marketing for the company, which has struggled in competition with Wal-Mart Stores Inc. and online merchants such as Amazon.com Inc. Gerald Storch, former chief executive officer of Toys “R” Us, sometimes gave television interviews from the property.
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