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What’s Old Is New: Old Navy Signs 18,500-SF Deal at East 86th Street Development

Old Navy is heading to the base of an upcoming 18-story condominium on East 86th Street and Lexington Avenue, Commercial Observer has learned, its first Upper East Side location.

The lower-priced clothing brand of Gap Inc. has signed a 15-year lease for 18,500 square feet on the ground and second floors (5,600 square feet of it at grade) at 147 East 86th Street, developers Ceruzzi Properties and Kuafu Properties announced. The developers declined to provide the asking rent.

The news comes a month after Gap Inc. announced that it would focus more on its Old Navy and Athleta brands. Over the next three years the company plans to shutter 200 Gap and Banana Republic locations, while adding 270 Old Navy and Athleta shops, as CO previously reported.

The East 86th Street Old Navy will be part of a $415 million 229,751-square-foot development, which will include 61 condominium units and 30,000 square feet of retail space. Residential amenities including a resident lounge, a children’s playroom, a teen room, a fitness center and a rooftop terrace.

Demolition for the project—which includes widening the sidewalk along East 86th Street in front of the property—is slated to commence within the next couple of weeks with completion set for early 2019.

“We are very pleased to have achieved this major milestone, and look forward to the commencement of new building construction,” Ceruzzi Managing Director Art Hooper said in a prepared statement. (Hooper is quoted since company head Louis Ceruzzi died suddenly in August.)

Ripco Real Estate’s Andrew Mandell, who represented the owners in the deal, said: “Old Navy recognized that the corner of 86th Street and Lexington Avenue is the epicenter of the regional market that exists on the Upper East Side. It’s also the densest from a population standpoint on Manhattan.”

Site acquisition started on Dec. 23, 2013 when the developers got a $33.1 million 99-year ground-lease from the heirs of Sol Goldman at 147 East 86th Street, as CO previously reported. The group then bought 151 East 86th Street from Town Sports International Holdings, the owner and operator of gym chain New York Sports Clubs, for $85.5 million on Sept. 12, 2014, property records show. That deal included New York Sports Clubs returning to the building at 151 East 86th Street, but the developers later bought out Town Sports. In March 2015 the developers purchased 19,315 square feet of development rights from 1283-1291 Lexington Avenue for $12.4 million plus 6,535 square feet of footprint rights for $1.6 million.

This April, Ceruzzi and Kuafu secured a $290 million construction loan from The Children’s Investment Fund for the project, as CO reported at the time.

RKF’s Ariel Schuster and Justin Fantasia worked on behalf of the tenant. Schuster declined to comment on the deal.


Source: commercial

Gap Renews Midtown East Lease as Company Announces Plans to Shed 200 Stores

Apparel chain Gap has inked a deal to retain its 15,942-square-foot store at 655 Third Avenue, according to landlord Durst Organization. Meanwhile the parent company, Gap Inc., announced plans today to shutter 200 Gap and Banana Republic locations.

Gap will hold on to the Midtown East location on the corner of East 42nd Street for another decade, since opening in 1992. It has 8,421 square feet on the ground floor and 7,363 square feet on the lower level, according to The New York Post. The asking rent in the deal was $250 per square foot, the Post noted.

Ariel Schuster and Justin Fantasia of RKF represented Gap in the deal. Ashlea Aaron handled the deal in-house for Durst. RKF’s brokers declined to comment via a spokesman.

The Gap deal is “a testament to the strength of retail along East 42nd Street and Third Avenue,” Jonathan Durst, the president of Durst, said in prepared remarks.

Gap Inc. has 3,652 stores worldwide—3,186 locations that are company-owned and the rest franchised, according to the second-quarter earnings report. Some 1,305 are Gap, 1,060 are Old Navy, 646 are Banana Republic and 133 are Athleta.

The company announced that over the next three years it would close 200 Gap and Banana Republic stores, while opening 270 Old Navy and Athleta stores.

The real estate moves allow the company to “focus to where customers are shopping, simultaneously increasing its presence in its more profitable value and online channels,” according to a company release. The investment in Old Navy and Athleta stores is “driven by growth in online and mobile channels, U.S. store expansion and continued market share leadership in loyalty categories.”

Old Navy’s net sales globally ticked up to $1.76 billion in the second quarter from $1.71 billion year-over-year, according to the company’s August earnings report. Athleta’s finances were not broken out. Gap’s net sales, meanwhile, dropped to $1.23 billion from $1.31 billion, and Banana Republic’s sales dipped to $579 million in the second quarter from $633 million a year prior.


Source: commercial