Kmart signs lease at Herald Square.
Forty-seven stories above the soon-to-be built Kmart, in the offices of the owner, Mid-City Associates, a partnership of the Metropolitan Life Insurance Company, Harry B. Helmsley, and Peter L. Malkin, Harry P. Kamen, Chairman of Metropolitan Life, witnessed the signing by Joseph E. Antonini, Chairman of Kmart Corporation, and Malkin.
This Kmart is expected to be open in time for the 1995 holiday shopping season and will occupy portions of four levels of the 57-story One Penn Plaza, the office building above the Long Island Rail Road and Pennsylvania Railroad Stations that occupies the entire square block between Seventh and Eighth avenues on the south side of 34th Street. The lowest retail level will open upon the LIRR Station Concourse. Kmart also will have its main entrance on 34th Street, just west of Seventh Avenue.
"This is a win-win deal for everyone," said Malkin. "Kmart will have access to the hundreds of thousands of people who work and shop in the 34th Street/Herald Square area, attend events at Madison Square Garden, and ride the Long Island Rail Road and Amtrak. New York City will benefit from the 500 or more jobs created by the store, the sales taxes, and other taxes generated, estimated at over $125 million during the initial term of the lease, with no tax relief or other subsidy provided by New York City. One Penn Plaza and its tenants will benefit from a major first-class retailing tenant. The neighborhood can expect dramatic change, with tens-of-thousands of people making 34th Street west of Seventh Avenue a retail destination. Railroad passengers will have additional access to and from 34th Street, by means of new escalators and elevators within the Kmart store."
"Kmart will be arriving on Track 22," said Kmart Corporation Chairman, President, and CEO Joseph E. Antonini, alluding to the fact that his store's entrance on the concourse of the LIRR is opposite Track 21. "We see the reawakening of New York City under the leadership of Mayor Giuliani as a great new market opportunity for our company. We plan to open 3 or 4 more new Kmart stores in the five boroughs in the next few years."
Harry P. Kamen, Chairman of Metropolitan Life, also expressed enthusiasm for the new business-friendly attitude of New York City and warmly welcomed Kmart and its many new employees.
"The art of this deal was accumulating the 140,000 square feet in the Concourse through the 34th Street ground floor areas of the building that were not originally designed to accommodate a single large tenant," said Daniel E. North, vice president and Director of Management and Leasing for Helmsley-Spear Inc., which manages One Penn Plaza for Mid-City Associates.
"Obtaining possession of the former F.W. Woolworth store, even though it was only 5,448 square feet, was the key to the puzzle," North said. Once this was accomplished, he and his associate Fred Posniak, working in cooperation with John B. Trainor, Jr., senior vice president of Helmsley-Spear, Inc., created and assembled 27 individual spaces, including 6 spaces on the ground floor, 11 spaces on the mezzanine below that, and 4 retail spaces on the recently-renovated LIRR Concourse. Much of the space was not vacant, which required canceling some leases with existing tenants and relocating other tenants. To create enough square footage to make this puzzle come together, North's team also reconfigured some of the building's entrances and corridors, which are now little-used since the LIRR opened its new main entrance and escalators on 34th Street near Seventh Avenue.
"And the reconfigured corridors will afford commuters a more direct path to the railroad," North added. He credits the M.T.A. and One Penn Plaza's attorneys, Ralph W. Felsten and David J. Bleckner of Wien, Malkin, & Bettex, counsel to One Penn Plaza, for helping make possible one of the most important retail/commercial real estate deals of the year. Peter A. Brandenberg, president of Brandenberg Realty Associates, Inc. and Stephen Friedus of Andover Reality, Inc. represented Kmart. Bruce M. Kauderer of Kauderer & Pact, P.C., was Kmart's attorney.
Retailing in the 34th Street area will never be the same. The major shopping area, whose western edge is usually thought of as Seventh Avenue, will now extend all the way to Eighth Avenue. Kmart and Macy's will make 34th Street and Seventh Avenue the busiest retail intersection in the world.
With the $315 million reconstruction of the James A. Farley Main Post Office, two square blocks of Eighth Avenue between 31st and 33rd Streets will be developed as the most important Amtrak station and a new retail mall is planned, with Federal, New York State and New York City support. The 34th Street shopping district will now stretch from Fifth Avenue to Ninth Avenue.
One Penn Plaza is currently undergoing a $50 million program of improvements, including all public spaces and mechanical systems and installation of new tenants in over 1 million of One Penn Plaza's 2.4 million square feet. The improvements include the redesign of the 33rd and 34th Street entrances, the Seventh and 8th Avenue plazas, the main lobby, the street level and railroad concourses, all the public corridors, all of its 44 elevators, and its mechanical equipment.
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|Title Annotation:||Manhattan, New York City|
|Publication:||Real Estate Weekly|
|Date:||Dec 14, 1994|
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