When it came time for the Big Apple institution Lee’s Art Shop to finally sell its longtime home on 57th Street, the deal took more than a New York minute – even when there was $82 million on the table.
After more than six decades serving the city’s artistic set – and with the real estate market as high as the supertall towers on Billionaires’ Row – the owners of Lee’s decided in 2013 that it was time to sell.
But they had an unusual request: The family behind the business needed an unusually long closing period in order to wind down the shop at 220 West 57th Street. Two-and-a-half years later, Thor Equities and General Growth Properties closed on their $81.5 million purchase, and the brokers at Besen & Associates came away with an award-worthy deal.
Besen’s Amit Doshi and Lynda Blumberg are in the running for a Real Estate Board of New York Most Ingenious Deal of the Year Award for their transaction, titled “Going Out of Business Sale: The Disposition of Lee’s Art Shop On West 57th Street.”
The deal is one of 15 in the running for the coveted industry awards, the winners of which REBNY will announce April 4 at Club 101. Leading up to the awards ceremony, The Real Deal has been chronicling some of the submissions, which open a window into the behind-the-scenes wheeling and dealing that takes place to get some of the city’s most complex deals across the finish line.
The Besen brokers first approached the owners of Lee’s in 2005, but at that stage they weren’t interested in selling. But in the years that followed, owners Gilbert Steinberg and his wife, Ruth, died, and their children took over the business.
“In most simplistic terms they became real sellers,” Ron Cohen, Besen’s head of sales, told TRD. The shop had a contract to sell the store for $65 million, but Thor came in with an offer that was more than $15 million higher, and was willing to bend over backwards to get the deal done.
“It was the end of an era for their business, and the owners required two-plus years to wind it down gradually,” Cohen explained. “They had loyal customers and employees, as well as inventory to liquidate.”
In addition to the long closing period, Lee’s also wanted insurance that Thor would close the deal if the market changed while they were winding down the shop.
Thor agreed to put down a “substantial” deposit that would be released in phases from escrow, and agreed to cover Lee’s mortgage payments throughout the course of the contract period.
“They really wanted to buy the building, so they went above and beyond to address the needs for the seller,” Cohen explained.
Finally, Lee’s got a new certificate of occupancy for the building, so the upper floors could be converted from office to retail use. Starting in 2019, Thor and GGP will be marketing the 35,000 square feet at the building, which is right across the street from where Nordstrom plans to open its first New York City location at the base of Extell Development’s Central Park Tower.
“Thor and GGP took a leap of faith [and paid $3,732 per square foot] because they believed that in two years they could command a rent to achieve a respectable level of return,” Cohen said.