Madison Capital won a bid to acquire a retail space spanning at least 32,000 square feet at the base of Scholastic’s corporate headquarters at 549-555 and 557-559 Broadway in Soho for $400 million, The Real Deal has learned.
Madison Capital, a Midtown East-based investment firm led by Richard Wagman and J. Joseph Jacobson, has an unidentified equity partner in the deal, according to sources familiar with the negotiations. Asking rent for the new ground-floor retail space will likely exceed $1,000 per square foot, sources said. It was not immediately clear if Madison has already signed a contract for the deal.
Scholastic paid $25.5 million for the 10-story property at 557-559 Broadway in 2010, and $255 million for the 12-story property at 549-555 Broadway last year, records show. The former was constructed in 1999, while the latter dates back to the early 1900s.
The two properties, located between Prince and Spring streets, are connected and collectively have frontage at 120-130 Mercer Street.
In November, the publicly-traded children’s publishing, education and media company announced its plans to convert the lobby for its offices at 557 into a 7,400-square-foot ground-floor retail space and move the lobby to Mercer Street. The renovation involved the closure of the Scholastic Store in January.
As part of the deal, the company would also vacate the full 24,500-square-foot second floor and an unspecified portion of the third floor, allowing for that office space to be converted to retail use, sources said.
The available retail space also includes 7,400 square feet on the ground and 6,000 square feet on the lower level, according to documents obtained by TRD. The two current retail tenants at 555 Broadway are Hugo Boss, which has a lease for 9,075 square feet through 2020, and Sephora, which leases 8,800 square feet through 2023.
Scholastic shopped the retail to about 10 firms, sources said, including Jeff Sutton’s Wharton Properties, Joseph Sitt’s Thor Equities, and Aurora Capital Associates.
Helen Hwang of Cushman & Wakefield served as a consultant on Scholastic’s behalf. A representative for Madison Capital declined to comment, while Hwang could not be immediately reached.
A spokesperson at Scholastic declined to comment on the deal, only saying, “We are looking at various opportunities to monetize the space at 555/557 Broadway.”
Earlier this month, Madison Capital and equity partner Prudential Real Estate Investors sold a Carnegie Hill retail condo for $30 million, as TRD reported.