The MTA is finally set to award a master lease for the Columbus Circle retail space. (Photo: Metropolitan Transportation Authority / Patrick Cashin)
When the MTA rehabilitated the Columbus Circle complex at 59th St., the project, like many others, was delayed and overbudget. By the time the rehab wrapped in 2010, there was no formal ribbon cutting or acknowledgment of the project’s end. It was just done, and the MTA had a shiny new station at its disposal.
With the new station came a new retail opportunity. The corridor underneath 8th Ave. contains approximately 11,500 square feet of retail space outside of fare control, and the 13 stores gave the MTA an opportunity to show that they can encourage high-quality retail. Yet, since open the station, the only thing that’s happened was an RFP issued in mid-2012. Now after fits and starts, the MTA is set to award a master lease to the space to a group headed, in part, by a former MTA real estate executive.
In materials distributed to the Board’s Finance Committee this week, the MTA has unveiled that an entity called Drop By at Columbus Circle has won the bidding to take over the maser lease for the space. The lease will run for 20 years with a 10-year option held by Drop By, and rent payments with start at over $700,000 a year with Drop By owning, by year three, 20 percent of operating income over $2.775 million. The breakpoint will increase periodically over the term of the lease, and Drop By will have the ability to sell digital advertising in the space once the MTA’s current deal with CBS Outdoors expires.
So who won? Drop By is a joint venture between Susan Fine, the former MTA Director of Real Estate who was responsible for the retail revitalization at Grand Central, and 40 North Properties, an investment company held by Howard Glatzer. The MTA doesn’t explicitly address the appearance of a conflict of interests in award Fine’s group the lease but notes that Drop By’s bid offered the highest guaranteed base rent. She has also worked in the private sector for a while since leaving the MTA.
With the lease situation cleared up, the MTA has high expectations for the space. According to the Board materials, the MTA expects “retail uses of the level of quality generally prevailing at other high quality shopping malls associated with transportation facilities in New York City, such as, by way of example, the below-grade retail concourses at Rockefeller Center and the up-to-date terminals at the New York area’s major airports.” The MTA also expects Drop By to fulfill the promises of its RFP as it installs air conditioning in the circulating space and corridor underneath 8th Ave. in the station complex.
It’s interesting that the MTA’s points of comparison here are airports and Rockefeller Center but not Grand Central. It seems a more modest goal for Columbus Circle. Still, it’s clear that Drop By, between the long-term commitments and promised capital upgrades, has higher goals in mind. And those goals matter because the MTA is undergoing a similar process with a more important piece of real estate in Lower Manhattan.
As the Columbus Circle RFP process took a little bit longer to resolve than the agency would have hoped, the Fulton St. Transit Center is set to open to the public in June. It won’t be fully completed by then, and it’s unlikely that any of the retail spaces will be in use. But the MTA wants a similar master lease executed with one entity responsible for filling the spaces there. Think, then, of Columbus Circle as a test run. If the MTA can find a tenant here willing to invest in an underground space, it may be even easier to convince potential investors to look at the Fulton St. Transit Center as a bigger and more visible opportunity.
5 comments
Ben,
so over all what grade do you give this deal – A, B, C or D. Choose 1.
Best of luck to the new master lessee but I don’t know that I see this becoming a new Rockefeller Center. Already there is a ton of street-level vacant real estate right overhead, including never-filled spaces in the Hearst Tower (which, admittedly, they may have long been looking for out-of-market prices for) and the huge former CompUSA footprint across the intersection from that. Combine that with a low, dim, uninviting hallway … it’s not promising. At least at Fulton Street much of the retail space will be aboveground and have much better access to natural light.
The space will be a disaster. “Property management” is the problem. The common space will be dirtier than a Section 8 building. Gum or gum stains everywhere. Ceilings caked in leakage deposits, sometimes sewer water dripping down, and ceilings caked in black lint. High pressure wash cleaners, they are useless. Most people can never tell the station was even cleaned after the water dries. Its still black dirt on all the surfaces.
MTA Selects Columbus Development to Construct Retail Concourse
Courtesy of Vamos ArchitectsNew York City — In a public/private retail venture, the Metropolitan Transportation Authority (MTA) has selected Columbus Development LLC to develop and manage Shop//Stop, a retail destination on the concourse of the 59th Street-Columbus Circle subway station in New York City. Shop//Stop will occupy the 27,000-square-foot retail concourse and include up to 30 retailers ranging from food and beverage to apparel and technology accessories.
Columbus Development will invest $6.5 million to improve the space, including upgraded signage, furniture and finishes, along with the installation of air conditioning throughout the concourse. Shop//Stop will benefit from high pedestrian traffic as more than 21 million people pass through the concourse annually. The project will be complete in early 2015.
Susan Fine, principal with Columbus Development, is the principal developer on the project..
So how does a retail establishment rent space at the Columbus Circle 59th street Subway Station? We have been trying to lease space here since last summer and have not had any response? The only thing I see there now is large advertising posters covering all of the windows. Is this what the commercial leasee had in mind for this valuable space? How unfortunate is this to waste the opportunity for active commercial retail for commuters and the community?