The Real Deal New York

Marshalls eyes space in Williamsburg

January 14, 2011 06:23PM
By Adam Pincus

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Joseph Cayre and 242 Bedford Avenue

Discount clothing department store Marshalls and drugstore CVS are interested in leasing space in a troubled development site in Williamsburg, once the stalled construction project is completed, several brokers said.

The national chain retailers are looking at a lower-level space at 242 Bedford Avenue, just south of North 4th Street, the brokers, who asked to remain anonymous, said.

The half-built site is owned by Yehuda Backer’s Williamsburg-based Backer Group, which halted construction several years ago. Instead, the parcel has only steel shells with no current construction evident.

If completed as proposed in marketing materials, the two-story building will have about 27,000 square feet each on the ground floor, the lower level and the second floor, a setup by brokerage Metropolitan Skyline shows.

One broker said Marshalls was considering taking a small amount on the ground floor and the entire lower level. CVS would take a large amount of the ground floor, a broker said.

The neighborhood is sensitive to large chains moving in. In fact, a senior marketing executive at Duane Reade, which recently opened a location in Williamsburg, told The New York Times in a story this week: “We knew we would have a little bit of a battle to try to bring Duane Reade into this community, because they really don’t like a chain store.”

While some said it was a positive sign for Williamsburg, others questioned what impact it could have on the neighborhood’s well-known market for second-hand clothing stores, such as Buffalo Exchange or Beacon’s Closet.

A major retailer like Marshalls entering the neighborhood could bring along other national chains, said broker Timothy King, a principal at CPEX Real Estate.

“Landlords love the traffic and credit rating that is part of the trade, and customers love the price points and selection,” he said.

But Jorge Perez, the store manager at Vice Versa Vintage at 241 Bedford Avenue, said large chains could harm the entrepreneurial environment in Williamsburg.

A Marshalls “would ruin that kind of atmosphere. [The chain] is too commercial. If it is a Marshalls, what is next?”

The Backer site has a complicated background, including a pending purchase agreement and a bankruptcy.

Although property records indicate Backer still owns the site, Alex Adjmi, a major retail investor in the city, partnered with Joseph Cayre to sign a purchase agreement in July to buy the two properties for an undisclosed price, city property records show. There is no record of that sale going through, but in October Backer modified that agreement and gave them the right of first refusal. In addition, Adjmi lent Backer $575,000 in October, property records show.

Three of Backer’s ownership entities filed for chapter 11 bankruptcy protection in the Eastern District of New York in Brooklyn in November and in December, to stave off lender Capital One Bank from wresting control of the properties.

Backer declined to comment. Cayre and Adjmi did not return calls for comment. A spokesperson for Marshalls said there was no lease signed at the location, “so I cannot confirm a store coming to the area at this time.” CVS also said it did not comment on deals unless a lease was signed.

Backer, who has owned the properties since at least 1997, blamed difficulties with zoning and variances for causing delays, which in turn led to a default on a $5 million loan from Capital One Bank. Backer and the lender restructured the loan in March 2010. As part of that deal the bank demanded a deed-in-lieu to be held in escrow, which it could file to take control of the property in the event of another default.

Court papers say the lender planned to file the deed Nov. 11, leading to the first bankruptcy filing.

“Capital One, in a naked attempt to wrest the valuable property from the debtor, manufactured defaults,” Backer’s court papers filed said. In addition, he is seeking $50 million in monetary damages and $100 million in punitive damages from the bank, filings show.

Capital One did not immediately respond to a request for comment.

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