(Corrects to delete reference to broker’s role in 1986 deal in fourth paragraph of story published on Oct. 3.)
FAO Schwarz may vacate its iconic flagship toy store on Manhattan’s Fifth Avenue after almost three decades at the location, according to real estate brokers.
Toys “R” Us Inc., FAO Schwarz’s Wayne, New Jersey-based parent company, hired CBRE Group Inc. to market about 60,000 square feet (5,600 square meters) at the base of the General Motors Building for sublease, brokers from two competing firms said today. 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, chairman 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 Cushman & Wakefield Inc.
“Yes, it’s beautiful, it’s a landmark,” Consolo said. “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. (BXP:US), the biggest U.S. 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 Inc.’s “cube” store, which draws tourists from all over the world to shop and view its 32-foot (10-meter) glass entryway. In the past year, CBS Corp. (CBS:US) shuttered a TV studio opposite FAO Schwarz. That space has been in part leased to the jeweler Cartier Inc.
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 today from Cushman & Wakefield. The FAO space was “recently put on the market for sublease,” Alan Schmerzler, an executive director at the brokerage, said at a news briefing.
The company’s lease expires in 2017, said Kathleen Waugh, a Toys “R” Us spokeswoman.
“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. In 2011, it exercised an option to stay at the GM Building beyond the 2012 expiration of its lease.
The store is home of the giant piano that actor Tom Hanks danced on in the movie “Big.” It also features a candy shop known as FAO Schweetz and the Muppet Whatnot Workshop.
To contact the reporter on this story: David M. Levitt in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Kara Wetzel at email@example.com