The first newly constructed retail space in Soho’s Broadway in about a decade hit the leasing market in January 2015, when the market was still sizzling. But almost three years later, 433 Broadway still hasn’t found a long-term tenant. So the landlord, Omari Properties, went with an unusual Plan B.
Last month Collab, a store that allows online brands to showcase their goods in exchange for a fee, opened in about 2,000 square feet and is set to expand to 6,000 square feet at the property, which also holds co-working spaces on the upper floors.
Like pop-up stores, Collab can open its doors and shut down in a matter of weeks with minimal buildout. But while popup stores typically showcase a single company’s products, Collab showcases dozens.
The startup approaches online brands that don’t have the means for a store but might still want to get their products in front of Soho shoppers. They can rent a small shelf or clothing rack for between $1,500 and $2,500 per month, the company’s founder Abdul Thunayan said. And unlike some co-retailing models, where companies operate mini stores within a larger space, Collab mans the store and manages sales.
The rent goes to the landlord and Collab gets a share. Both also receive a percentage of sales. A “curations team” decides which brands fit together and which don’t. Thunayan, who also heads the short-term retail rental listing site Retail Linx, argued that the revenue sharing model is “more flexible and more profitable for the landlord” than a traditional lease. The company is eyeing a second location in Brooklyn, he added.
Edan Abehsera, CEO of the Cubico co-working space in the property and son-in-law of Omari Properties’ Eddie Omri, said he sees the deal with Collab as a “very low-risk” temporary fix until he finds a long-term tenant: it pays the bills, is less disruptive than a pop-up store and cheaper than hiring a broker for a short-term fix, he said.
Omari, which acquired 433 Broadway in 1996 and spent about 15 years developing the property, had been targeting $600 a square foot for the 9,100-square-foot retail space, Abehsera told The Real Deal earlier this year. Abehsera declined to say how much money the space makes when fully rented out, but claimed it could rise higher than the asking rent for a long-term lease (Omari was asking $300,000 a month — $590 a square foot — for the retail space in late 2015, according to Agorafy). “If the market goes right, this could be the new normal,” he said.