Crate & Barrel is closing its flagship, 62,000-square-foot location at 650 Madison Avenue, about five years before its lease was set to expire.
The furniture and home goods giant will now have only one New York City location, at 611 Broadway in Soho. It has no plans to relocate the closed Madison Avenue store, according to the Wall Street Journal. The store will close Aug. 2.
Vornado Realty Trust, Crown Acquisitions, Highgate Holdings and Oxford Properties Group purchased 650 Madison Avenue for $1.3 billion in 2013 from the Carlyle Group and planned to raise rents beyond the $20 million per year that Crate & Barrel was already paying for the space. The owners are aiming to increase the value of the 75,000 square feet of retail to $1 billion.
In anticipation of the higher rents, Crate & Barrel decided to cut and run early, and negotiated an exit from the lease.
“This was a difficult decision and we are grateful to our departing associates for their hard work and service,” the company said in a statement. “We remain well positioned to serve the New York market through our Soho store, as well as stores in the surrounding area and through our website.”
Rents on the Madison Avenue retail corridor where the store was located increased to an average of $1,584 per square foot in the first quarter of 2015, an 8 percent bump from the previous year. The stretch of retail is now almost entirely populated by luxury brands.
The early exit will allow building investors to “unlock its value well ahead of plan,” a person familiar with the situation said. [WSJ] — Tess Hofmann