The fashion label Tommy Hilfiger Corporation has signed a deal to expand by 45,000 s/f at 601 West 26th Street, according to sources.
The apparel company already has over 200,000 s/f at the location, the majority of floors four and six. The Starrett-Lehigh Building, at 601 West 26th Street, has cavernous floor plates over 130,000 s/f in the building’s base, offering large tenants the chance to sprawl their operations on just a few floors, a desirable type of layout.
In the expansion deal, Tommy Hilfiger will sublease a portion of the building’s fifth floor from Lord & Taylor.
The deal was complex because Tommy Hilfiger is actually sub-subleasing the space from itself. Tommy Hilfiger moved into the Starrett-Lehigh Building roughly three years ago, but soon sublet the fifth floor shortly to Lord & Taylor, which had taken the space for a private label business it ended up scraping, according to sources. No longer needing the space, the department store sub-sublet portions of the floor to other tenants.
When Tommy Hilfiger decided it needed part of the space back. it wasn’t possible to simply unravel the sublease with Lord & Taylor, in part because of those sub-subleases completed with the other tenants. The company’s brokers, a Jones Lang LaSalle team led by Mitch Konsker and Matt Astrachan, structured the deal to simply pay Lord & Taylor a rate that equalized the rents it was paying Tommy Hilfiger, which some sources put in the $20s per s/f.
The new expansion will bring Tommy Hilfiger’s presence in the far west side office building to over 250,000 s/f and will make its space contiguous again. Sources familiar with the deal say that internal staircases linking Hilfiger’s spaces on floors four, five and six will now be reopened.
Meanwhile, the Wall Street Journal reported last week that designer Tommy Hilfiger, who founded the eponymous company in 1984, is in contract to purchased the Madison Clock Tower building from Africa Israel for $170 million. Hilfiger sold the corporation to Apax Partners for $1.6 billion in 2006. Phillips-Van Heusen, owner of Calvin Klein, would purchase the company for $3 billion in March 2010. Hilfiger remains the principal designer of the company.
JLL’s Konsker and Astrachan also recently completed another sizable transaction. The pair, who left the real estate services firm Cushman & Wakefield with colleagues Paul Glickman, Mitti Lieberson, Alex Chudnoff and support staff for Jones Lang LaSalle earlier this year, recently wrapped up renewing the investment bank Oppenheimer & Co. Inc.’s 90,000 s/f office at 200 Park Avenue. In that deal, Oppenheimer & Co. – not to be confused with OppenheimerFunds, the World Financial Center-based investment company owned by Mass Mutual – signed a long term deal to keep floors 24 and 25 in the three million s/f, 58-story building, which is owned by Tishman Speyer.
Rents in the transaction were not disclosed in a release announcing the deal, but sources familiar with the terms of the transaction said it was close to Tishman’s asking rents in the $70s per s/f. The sources said that Oppenheimer uses the space for its wealth management operations, which are expected to expand. Although wealth management currently only occupies about 75% of the space, by renewing both floors, Oppenheimer is banking on growth, according to the sources.
Because the deal was initiated by Konsker and Astrachan while they were still at Cushman, the brokers will split their fee with Cushman rather than JLL.
Konsker and his colleagues have captured a number of prominent agency assignments and other work since moving to JLL. Last year, Konsker and Alex Chudnoff completed one of the largest leasing transactions of the year, bringing the Chinese supply chain company Li & Fung into about 500,000 s/f at the Empire State Building.