New York discount fashion retailer Necessary Clothing signed a major lease that insiders say is the largest deal on Canal Street, between Centre Street and West Broadway, in recent memory. Necessary Clothing, owned by the Cohen family, inked a deal to lease retail space at 261-263 Canal Street in late July. The landlord, 267 Canal Street Corp., was represented by Philip Chong.
The deal is significant, brokers said, because in addition to its size it represents a change in direction for a shopping district populated by a large number of stalls selling souvenirs and knockoff products.
Necessary Clothing, which currently has four stores clustered on Broadway in Soho and one in Noho, is taking about 6,500 square feet on the ground floor, which had an asking rent of $250 per square foot. The deal also includes 4,520 square feet on the lower level of the six-story commercial building. The length of the lease was not disclosed. The store is expected to open in November, Chong said.
The deal comes as brokers have reintroduced another neighborhood property to the market, across the street. Late last month, Winick Realty Group listed a multi-level commercial property owned by the Gindi family, at 272-274 Canal Street, with a total of 7,200 square feet with 1,800 square feet of that on the ground floor. No asking rent was included.
The 103,000-square-foot Chong building between Broadway and Lafayette Street, which has the address 261-267 Canal Street, was formerly occupied by a diverse collection of retailers renting small stalls and selling a wide variety of items. The Chong family rehabilitated the property, located in the Soho-Cast Iron Historic District Extension, following plans reviewed by the Landmarks Preservation Commission.
Necessary Clothing took one of the two spaces fronting Canal Street. The other, with 5,900 square feet on the ground floor and 4,350 in the lower level, remains available.
“We picked this tenant because it was a good segue into higher-end retail,” Chong said. “It is a great transition for the [apparel] company with a major presence on Broadway.”
He said his firm could have divided the space into stalls again — as much of the stretch of Canal Street is — and leased it for more than $700 per square foot. Instead he selected an apparel tenant with the intent of shifting the retail mix on the street. “We are taking a beating,” on rent, he said. “But I think we are doing the right thing by making a change on Canal Street.”
Albert Laboz, a principal with United American Land, which is the largest landlord on the stretch of Canal Street from Centre Street to West Broadway, could not recall a larger deal over the past decade.
“It is further evidence that Canal Street is really becoming an extension of Broadway in Soho,” Laboz said.