People wear protective face masks outside Home Depot in Flatiron District as the city resumes Phase 4 reopening after restrictions were imposed in New York City on Aug. 8, 2020 to slow the spread of the coronavirus.
Noam Galai | Getty Images
The hardware store has signed a lease for an asset from Gazit Horizons in Manhattan’s Upper East Side (410 E. 61)st St., which extends over 120,000 square feet over four floors.
Bed Bath & Beyond’s current lease expires in 2021. The Home Depot deal is one of the largest retail leases, in terms of size and total annual rent, to be seen in Manhattan in recent years.
According to someone familiar with the terms of the contract, Home Depot pays roughly double the rent that Bed Bath & Beyond paid.
“We signed the lease in April,” said Jeff Mooallem, president and CEO of real estate company Gazit Horizons, in an interview. “The biggest problem with the deal was that neither party knew what it would cost to retrofit it … We both had to do some due diligence to see if the deal was structurally achievable at all.”
“Reports of retail deaths in New York City are grossly exaggerated,” he added. “Executing this lease at the height of the Covid-19 pandemic is an important sign of confidence in New York.”
In the middle of a multi-year turnaround plan, Bed Bath & Beyond has announced that it will close 200 of its eponymous stores over the next two years. It has cleared the locations for around 60 stores that will close by the end of 2020, including the Upper East Side store. It operates a handful of other locations in Manhattan, including on the Upper West Side.
Meanwhile, New York’s retail property market has been growing from the Coronavirus pandemicas is the case in much of the country, with tenants unable to pay rent or forced to vacate properties entirely.
The average asking rent for retail space in New York fell for the 12th consecutive quarter to $ 659 per square foot in the third quarter of 2020, a year-over-year decrease of 12.8%. This is based on data from the commercial real estate service provider CBRE.
Home Depot has two locations nearby in New York City, one in Midtown and one in the Flatiron neighborhood. The Midtown Store, 59th Street, is expected to close on 61 after moving to a larger roomst Road.
“We believe this location will be more affordable for residential neighborhoods and look forward to continuing to serve our customers on the Upper East Side,” said a Home Depot spokesman.
Both Home Depot and Gazit Horizons, the North American subsidiary of Gazit Globe based in Israel, were represented by Peter Ripka of commercial real estate services company Ripco Real Estate.