Normandy Real Estate Partners plans to spend $40 million to convert several of the upper retail floors at the ABC Carpet & Home building in the Flatiron District into office space.
Once the conversion is complete, the developer will market the space with asking rents above $100 per square foot, the Wall Street Journal reported.
Normandy bought the upper floors of the building at 880-888 Broadway last year for $133 million, as The Real Deal first reported. ABC Carpet will continue to own the 20,600-square-foot retail portion.
Normandy’s plan is a sign of the times, as investors look to expand lucrative office space at a time when retailers are scaling back.
“Many larger-format retailers such as department stores and furniture stores are reworking their concepts to maximize their retail footprints,” CBRE retail broker Amira Yunis said. “Retailers still want to showcase their goods, but, due to the changing retail environment and high occupancy costs, many are finding they no longer need this much space.”
Macy’s, for example, is consolidating its footprint at its Downtown Brooklyn store, where Tishman Speyer is converting the upper floors of the store and adding 10 new floors of office. And Lord & Taylor is reducing its store at its flagship store on Fifth Avenue, which WeWork and partner Rhone Group are buying for $850 million.
Normandy’s building will have floor plates around 35,000 square feet, a roof terrace and a 4,000-square-foot glass penthouse. The developer will need approval from the city’s Landmarks Preservation Commission. Normandy received a $170 million loan from SL Green Realty to acquire and redevelop the property. [WSJ] – Rich Bockmann