Midtown toy center proposed
By Brent Felgner -- Gifts and Dec, 6/16/2006 8:36:00 AM
NEW YORK—Seventeen months after learning the only home it has ever known was sold out from under it, the toy industry may be on the verge of finding a new International Toy Center—perhaps ready in time for the February 2007 American International Toy Fair.
Now, New York Toy Tenants has until July 31 to initially deliver a minimum 300,000 square feet in signed showroom leases for the deal at 636 Eleventh Ave. One of the larger buildings on the west side of Manhattan, the 11-story structure occupies the entire east side of the block between W. 46th and W. 47th Sts.
"We think this building works," says Steven Greenfield, CEO of Salo Ventures, who founded and is one of the coordinators of NYTT.
In a series of three meetings on the 11th floor of the building next week, NYTT will present the proposal to the industry and begin its push to gain acceptance, Greenfield says. The meetings will take place at 8:30 a.m. on Tuesday, June 20, and at 8:30 a.m. and 4:00 p.m. on Wednesday, June 21. The sessions are timed to the Licensing Show when many companies' executives will be in town.
"Time is of the essence," Greenfield tells Playthings. "This is a phenomenal opportunity for the industry to stay together in one place, but the industry is going to have to act quickly and in force, because if there aren't enough people the deal will not go through."
The deal
According to an email sent yesterday to likely showroom tenants, NYTT attorneys are currently negotiating a lease form for the industry. Among its provisions:
• Leases of five, seven and 10 years will be offered ranging from $39.20 to $44.20 per square foot, depending on the length, with increases of 2 percent to 3 percent, depending the term, after the first year.
• The landlord will provide basic showroom build outs at no additional cost. In the alternative, the tenants may design the space themselves and receive and $35 per square foot "cash contribution," along with the landlord's base building work.
• Included in those rental amounts, $1 per square feet will revert back to the NYTT.
• Tenants will split the cost of the building's electricity plus a 10 percent fee, and pay for their own cleaning services.
• Tenants will also pay a pro rata portion of future real estate tax increases and fuel increases above the 2007 calendar year level.
• Tenants will have one option to extend their leases.
Space allocations will be made largely on a first come, first served basis, along with other considerations, such as space demands.
The landlord will also provide a 2,000 square foot multi-purpose space to serve as a buyers' lounge, conference and media room.
Dealbuster?
Greenfield expressed concern over the continuing wrangling between existing tenants at the old ITC and new owner The Chetrit Group. The tenants have periodically complained of harassment, subtle and otherwise, and have gone to court several times to assert their tenancy rights as Chetrit begins construction to convert the building to residential units.
In the meantime, protracted exit negotiations have been taking place. But Greenfield worries that delays while awaiting the outcome of those talks might impede closing the deal on the new building.
"We need these people to come in," Greenfield says. "Unless they can cut a deal with the landlord [Chetrit], we could be in jeopardy. We've heard from the [tenants'] attorneys that unless they get the right kind of arrangement, they're going to stay right where they are" through the end of their current leases, in some cases extending over years. Moreover, it's unlikely many of those tenants would sign new leases while still trying to arrange their exits from the old space, he says, adding "We need the whole industry to come together."
Big picture
Plans call for the new owners to renovate the building, constructing a new lobby and adding new elevators, reglazed windows, new air conditioning and new bathrooms, among other improvements. Nine passenger and freight elevators, including one oversized freight elevator will serve the building. The freight elevators will have easy access to a four-bay interior loading dock, according to the NYTT.
Most of the renovations should be completed in time for the February '07 Toy Fair, with the exception of part of the lobby and the new elevators. Greenfield says makeshift arrangements would be made to operate with four elevators for that one show if necessary.
The neighborhood is nine blocks north of the Javits Center and only a few blocks from the NYC piers so often used for other trade shows. It's reasonably convenient to midtown hotels, the Broadway Theater District and restaurant row. A new hotel is currently under construction a block away on Eleventh Ave.
Mass transit in the neighborhood is not abundant; the nearest subway station is located at Eighth Ave. and W. 50th St. For that reason, the NYTT says the building will operate a shuttle service daily, year-round in the mornings and evenings to ferry building employees to and from nearby transit stops. Shuttle and bus service is planned for major destinations during shows, Greenfield says.
The dealmakers
Constructed in 1903, reportedly as a candy factory, the building is mostly vacant today. At various times it has served the printing industry and as back-office support for various companies.
The current proposal calls for the toy industry to occupy the third through tenth floors, along with the concourse and basement, which will also be built out for showrooms. All but the third floor have approximately 43,000 square feet of rentable space. It's expected that the ground, second and eleventh floors would be occupied by Elyse Kroll, whose fashion industry shows are well-known.
The NYTT stated in its email that if leases are signed by July 31, with construction approvals by August 15, the developer will guarantee full completion of each tenant's space by mid-January 2007.
"While there is a lot of work to be done to this building, this specific developer has a stellar reputation and has agreed to a penalty provision if construction of an individual space is not timely completed for the February Toy Fair," according to the email.
The landlord-developer will be RCG Longview, a joint venture between the Feil Organization and Winoker Realty, which signed a contract last week to purchase the building, the NYTT says.
The Feil Organization is an old-line family-owned real estate firm with a broad portfolio across all property segments, particularly residential. It owns one other showroom building at 261 Fifth Ave., which houses home textiles showrooms.
Winoker Realty, led by principals David Winoker and Ira Z. Fishman, a 30-year-old brokerage and property management firm, is currently undergoing a transformation to include a broader base of commercial real estate services.
Finally, NYTT will formally establish itself as a non-profit to further the interests of its members, funded with the $1 per square foot charge in the rent base, with each tenant having a vote in its decisions.
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