By Daniel Geiger
Gilt Groupe, the online retailer that has made a name for itself with daily sales of discounted designer goods and other products, is considering a major expansion at 2 Park Avenue.
The company currently occupies the building’s entire fourth floor, a roughly 50,000 square foot space, on a sublease from the Internet search engine Yahoo! that is set to expire in September.
According to people familiar with Gilt, the company is eyeing a renewal of its existing floor and potentially taking as many as three more; floors five, six, and seven, which are set to come available later this year. The Hartford, an insurance and financial services company, currently occupies that space but is said to be touring the market to relocate its operations elsewhere in midtown in a move that would create the opening for Gilt Groupe to grow. The Hartford, in fact, almost had a deal to move to 120 Park Avenue, before getting bumped from that building, along with the bank Wells Fargo, by Bloomberg LP, which just took a large block of space there.
A host of tech tenants, online marketing firms, and social networking companies have recently moved to take space in the city. Gilt is one among a number of Internet firms whose businesses have flourished, ushering in what appears to be a second dot-com boom for real estate in the city, albeit on a smaller and more cautious scale than the first one a decade ago.
In January, the Internet browser, software, and advertising firm Google for instance closed a deal to buy the office property 111 Eighth Avenue for $1.9 billion in a bold move to secure itself a New York headquarters in which it can grow. Late last year, the social media company Facebook, took 60,000 square feet at 335 Madison Avenue. As Real Estate Weekly just reported on its website, Twitter, the popular micro-blogging service, is scanning the market for as much as 15,000 square feet of space for a New York office.
Gilt has built a successful online business holding one to two-day sales of high end merchandise, primarily apparel and home goods, but also other products such as luxury vacation packages, at deep cuts to list price. Although the site’s offerings are a far cry from bargain fashion, the site has drawn attention for the quality of the brands and goods it typically features and the comparative discounts it is able to offer.
A deal for four floors in the building would make Gilt the biggest tenant in the roughly one million square foot office tower, which is owned by the real estate investment firm L&L Holding Company. 2 Park Avenue is home to the New York headquarters of the law firm Herrick Feinstein LLP and the perfume and cosmetics maker Coty Inc, which occupy about 160,000 square feet and 100,000 square feet respectively.
Asking rents in the building are in the mid $40s per square foot market sources say. Executives at L&L couldn’t be reached for comment for this story nor could representatives at Gilt Groupe. Marcus Rayner, a principal at the real estate services company CresaPartners, is representing Gilt in its space search according to sources. Rayner couldn’t be reached for comment by press time.