The Real Deal New York

General Growth asks $6M for planned J.C. Penney space

By Adam Pincus | December 09, 2013 05:13PM

Retail landlord General Growth Properties listed approximately 30,000 square feet of retail space at 200 Lafayette Street in Soho with an asking rent of $6 million where J.C. Penney once expected to open a specialty store.

GGP purchased 200 Lafayette from Kushner Companies and CIM Group for $148.75 million on Oct. 24, and listed the space near the end of November.

But that listing came as a surprise to many in the brokerage industry. That’s because J.C. Penney inked a high-profile lease in May 2012 with Kushner and CIM for the entire seven-story building, planning to use the upper floors for office space and the lower floors for a retail store, and paying about $8 million.

That lease was a boon for Kushner and CIM, which acquired the 127,559-square-foot building in January 2012 for $50 million. They invested another $30 million to rehabilitate the space.

But this past April, J.C. Penney ousted its CEO Ron Johnson amid faltering sales, and the new leadership did not want to open the retail location, though they did want the office space, a source familiar with the property said.

GGP, as part of its deal to buy the building, sought to recapture the retail space. However, the move cut rental payments in half to about $4 million, according to figures GGP CEO Sandeep Mathrani said during its third-quarter earnings call. But Mathrani thinks he will beat the total $8 million figure, and expects to get $5 million to $6 million for the retail alone.

A local broker confirmed that GGP was asking $6 million for the retail, which has 11,674 square feet on the ground floor, 11,262 on the second floor and 6,280 on the lower level. The asking rent was about $400 per square foot on the ground floor and $125 a foot on the second floor, the source said.

A CBRE Group retail team of Lon Rubackin, Eric Gelber and Andrew Goldberg is handling leasing at the space. Gelber did not respond to a request for comment, and Rubackin declined to comment.

Representatives for GGP and J.C. Penney did not immediately respond to a request for comment by press time.