J. Crew Relocates HQ to 225 Liberty St.
The clothing retailer moves its offices in a complex series of leasing transactions.
NEW YORK CITY—J. Crew is relocating its corporate headquarters to a larger space in Brookfield Place. The apparel and accessories brand is moving its offices out of its 295,000 square-feet area at 770 Broadway, between E. 8th and E. 9th streets. The building is often identified by the expansive, street-level Kmart retail store, off the Astor Place subway stop. The 15-floor structure, built in 1905, is owned by Vornado Realty Trust, according to Real Capital Analytics.
Vornado bought back J. Crew’s lease covering the 10th through the 13th floors, allowing a current tenant, who was reported as Facebook by The Real Deal and the Commercial Observer, to expand into the 295,000 square feet of vacated space. Although transaction details were not disclosed, The Real Deal reported that Vornado paid $35 million to buy out the four years left on J. Crew’s lease.
Simultaneously, in an independent transaction, J. Crew signed a 16-year sublease for 325,000 square feet of space from Bank of New York Mellon at 225 Liberty St. in Brookfield Place, owned by Brookfield Properties. The Wall Street Journal had reported that the BNY Mellon was leaving to move into a building it owns at 101 Barclay St.
JLL brokered the transactions: Peter Riguardi, Robert Martin and Joe Messina represented J.Crew in the buy-out at 770 Broadway. Martin, Messina and TJ Hochanadel represented J. Crew in its sublease with BNY Mellon. Riguardi, Frank Doyle, Michael Berg and Clark Finney, represented BNY Mellon in the sublease.
“This was an extraordinarily complicated series of transactions with multiple parties and many moving parts that all had to line up at the same time,” says Martin. “J.Crew was able to monetize the value of its below-market lease and to reduce its occupancy costs and upfront capital investment by relocating to nicely built sublease space at below-market rent, while the owners of 770 Broadway were able to accommodate an important tenant that wanted to expand in the building.”
J. Crew’s expansion of space comes after years of diminishing sales and some high-profile turnover in leadership. This included in 2017, the stepping down of Mickey Drexler as CEO, and the departure of president and executive creative director Jenna Lyons. The company also slashed 250 jobs.
Under the new CEO Jim Brett, according to its first quarter financial results ended May 5, 2018, the J. Crew Group’s total revenues increased 3% to $540.5 million. Comparable company sales increased 1% following a decrease of 8% in the first quarter last year. J. Crew sales decreased 7% to $591.9 million. However, Madewell sales increased 39% to $115.8 million.
According to the J. Crew Group 10-K form filed with the SEC, for the year ended Feb. 3, 2018, total revenues were $2.37 billion; for the year ended Jan. 28, 2017, $2.43 billion; for the year ended Jan. 30, 2016, $2.51 billion.
In a sign of optimism, in May, J. Crew leased space to open a store at 55 Water St., near Brooklyn Bridge Park in the trendy neighborhood of DUMBO. However, it still remains to be seen if the company that started in 1983 with catalogue sales sporting a “preppy” style can change tack for smooth sailing.