Failed Limelight Marketplace experiment to relaunch in September as department store

The developer of the Limelight Marketplace is cutting his losses one year after opening the boutique indoor mall in a former Chelsea church-turned-nightclub and is now planning to spend another $4 million to re-convert the space into a single department store.

According to the Wall Street Journal, Limelight operator Jack Menashe has already begun vacating many of the small retailers that moved in at the landmarked 30,000-square-foot Sixth Avenue venue, to much fanfare, in May 2010. But since its launch, the Limelight has struggled to retain tenants and maintain foot traffic levels, which Menashe blamed on a “lack of size to really execute it properly.”

The new concept will be “not unlike Barney’s,” said Menashe, who has hired a merchandise buyer but will operate the tri-level store himself when it relaunches in September as, simply, “Limelight.”

Many of the food retailers and restaurants at the current marketplace, including Grimaldi’s pizzeria, will be sticking around as subtenants, but although some of the marketplace’s fashion retailers will have their products sold within the larger store, they will no longer be individual shops.

Among the merchants that have already departed are LeSportsac, Alexander West and Hunter Boots. Meanwhile, chef Todd English just opened a new restaurant, Cross Bar, on the 20th Street side of the building last week.

“We just actually terminated a bunch of tenants, so the whole main floor is being opened up now,” Menashe said. “We’re going to darken it up, make it moodier.” [WSJ]