Last week, just days after Christmas, Toys”R”Us’ Times Square location was abuzz with activity but not for the best of reasons. Wednesday (Dec. 30) marked the last day the flagship location would be open, as it closed its doors for good at 6 p.m.
As The New York Times reports, the closing of Toys”R”Us’ doors may be less of a commentary on the state of the toy retailer’s overall health as much as a sign that many retailers are being priced out of the neighborhood.
Toys”R”Us’ lease will expire in January, according to NYT, and the company decided not to renew in order to save rent costs, said Elizabeth Gaerlan, director of corporate communications for the retailer. She also told the outlet that the company, which has 17 Toys”R”Us and Babies”R”Us locations in the New York City area, is currently looking for another Manhattan location.
According to C. Bradley Mendelson, a vice chairman at Cushman & Wakefield, the savings associated with closing the 110,000-square-foot space are “substantial.” Mendelson, who is leasing the property for owner Bow Tie Partners, said the going rate for the ground floor space alone — which is what Toys”R”Us has occupied since 2001, along with a lower level, a second floor and a mezzanine — would be about $42 million a year.
Mendelson acknowledged that Toys”R”Us would have been paying about half the market rate.
“A store that size would get a reasonable discount, but it’s still too much money for any one store to pay,” he remarked to NYT. “No one can afford that much space in Times Square today.”
In its place, Gap Inc. will open a Gap and an Old Navy flagship. Mendelson said Gap Inc. would take over about 60 percent of the Toys“R”Us space; the rest has yet to be leased.