The Real Deal New York

Guitar Center takes large space in old NY Times building

By Adam Pincus | January 24, 2014 11:48AM

The musical instrument retailer Guitar Center is moving into the former Daffy’s space in the old New York Times Building at 218 West 44th Street, sources familiar with the deal told The Real Deal.

The California-based retailer signed a 15-year lease last month with Africa Israel Group for 600 square feet on the ground floor, and about 28,000 square feet on the lower level of the building, the sources said. The asking rent was $2.3 million per year, they said, or about $80 per square foot blended over both floors.

The former New York Times building with an official address of 229 West 43rd Street, located just off Times Square between Seventh and Eighth avenues, is divided into two commercial condominiums. Africa Israel is the owner of a condo composed of the lower level through a portion of the fourth floor, information from data firm Real Capital Analytics shows. The private equity giant Blackstone owns the condo covering the rest of the fourth floor up through the 16th floor, according to data from RCA.

Rents in the center of Times Square surged over the past several years, and Cushman & Wakefield statistics put the ground floor asking rents at $2,213 per square foot in the fourth quarter of 2013. But asking rents fall dramatically on side streets and lower levels.

The discount apparel chain Daffy’s filed for bankruptcy in July 2012, less than two years after signing the lease at the Times Square building. The retailer sold off its assets — to JEMB Realty and Aurora Capital Associates purchased its leases — after announcing in 2012 that it would close all 19 of its stores.

Africa Israel bought back the lease in this building, sources familiar with the deal said.

Bruce Shepard, a partner at brokerage SCG Retail, represented the Guitar Center, while Lon Rubackin and Gary Trock both senior vice presidents at CBRE Group, represented the landlord.

In October, Rubackin and Trock represented the landlord in a deal signed with the Japanese restaurant chain Haru in the building.

CBRE, SCG, Africa Israel and Guitar Center did not immediately respond to a request for comment.

In 2003, Shepard was part of a group that brought Guitar Center to 25 West 14th Street, earning a Real Estate Board of New York award for the transaction that most benefits Manhattan’s retail market.