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Many eye Coliseum, but what will work?

The MTA's request for proposals to rent the Coliseum while the deal to sell the property to Mortimer Zuckerman stalls has brought interest from all parts of the country and from a variety of brokers and users. New York City's retail experts believe the Coliseum at Columbus Circle can become a substantial retail hub for the city. With an excellent transportation network and large spaces the specialists see many opportunities for the right mix.

This week MTA officials will be opening and scrutinizing the proposals for new uses which were due last Friday. The Coliseum building that stands on the site was constructed in 1956. It has a 650,000-square-foot, seven story exhibition space, a 26-story office tower of 500,000 square feet and a 650-car garage.

The extent of those proposals and the amount of money that .could be gleaned from them will also affect the Zuckerman deal. If the city can find a group willing to take a lease for 10 to 15 years, it might play hardball with Zuckerman.

The MTA retained Edward S. Gordon to explore options for the site and its report does not discuss or recommend either a convention center/trade show or television and film studio usage -- proposals that it received for the space last year.

Instead, it concluded that the most promising option was for groups of "big box" retailers such as TJ Maxx and Filenes Basement as well as superstores such as Tower Records, Bed Bath & Beyond, Home Depot, and Borders bookstores. Perhaps combined with a sports user, the consultants said this would generate significant interest and the highest net present value for the facility.

Sport/entertainment users were named including Cinetropolis, an adult entertainment center; Iwerks Inc., which features virtual reality interactive rides and is known to be seeking a Big Apple spot; and Discovery Zone, a children's climbing and entertainment space that is often used as a babysitting service while parents are shopping in malls.

A vertical retail mall with many specialty shops was not recommended due to the densely packed street scape.

The report suggested single-tenant users such as Sports Authority; Office Max; Payless Drug Store; Builder's Square; and K-Mart. While a single tenant user would require a 15-year term and would pay a lower rent, the report said such a tenant will not require contributions toward tenant improvements and would warrant further exploration.

A department store option combined with ground floor retail pointed to Nordstroms, Neiman Marcus and others. It did not recommend this since it would require the largest up-front capital investment along with a lease of 15 years plus options and result in the lowest net present value.

The recommendations and conclusions section stated there was no retail interest for a lease of five years or less. A 15-year lease with an MTA right to cancel in 10 years would draw active interest. "I think they're in for a big shock," said Thomas F. Galvin, the former head of the Javits Center whose trade show proposal for the Coliseum was passed over last year. "A lot of people don't think retail is an appropriate use."

Prospective users that have seen the REI [Request for Expressions of Interest] include studios such as Disney, United Artists, Sony, and the networks; large retailers including Saks, Sears, K-Mart, Bradlees, Toys 'R Us; Nordstroms and Caldors; many individual developers and investors in apartments including Brodsky, Macklowe, Winter, Zucker, Zeckendorf. Rudin; major shopping center operators such as Mall Properties, Taubman Company, Corporate Property Investors, The Rouse Company; parking operators such as Kinney, MAS 284 Parking Corp, and Square Parking; and investor advisors and bankers.

Other city retail analysts came to conclusions similar to the Edward S. Gordon report as to possible uses for the space.

Benjamin Fox, executive vice president of New Spectrum Realty Services Inc., a retail store leasing broker, noted Columbus Circle has a tremendous transportation hub and combined with the garage could be accessible and be categorized as a regional hub.

Fox suggested looking at movies since there is a shortage of screens in the area. He observed that a 10-year lease would not make the investment worthwhile, nor would it for a large entertainment user. He also thought a mix of 20,000 to 30,000-square-foot tenants would work.

There are many large space users that are destination retailers including The Gap, Woolworths and others that could draw, he noted. Nordstroms, as a higher-end retailer, might also work.

"This is a pretty nice section of town so there is the argument that they could succeed there," Fox noted, saying that retailers like Nordstroms and Sears have tremendous drawing power. "Where does a tiger or a lion sit? Anyplace they want. They transcend the location."

A vertical mall with Nordstroms as an anchor could be a wonderful success if it's done right, he suggested.

Fox thought a hotel might work without major environmental objections, but he was not certain about the profitability of trade show space or the need for it in light of the Javits Center.

Faith Consolo of Garrick-Aug Assodates Store Leasing, has consulted with several interested major users who want terms of 10 years with three five-year options. She believes the location could become the anchor for the southerly shopping district of Broadway. A movie complex or specialty stores could work, she believes because the site is so accessible. "The logistics on the building is the real challenge," she added.

The anchor is the key, believes Consolo, because location-wise it offers infinite possibilities. "For one of the discounters it's a home run," she said, ticking off Bradlees, Channel and Bed Bath & Beyond. "But it needs some excitement," noting that some of the big shopping places are entertainment for the shopper.

On the other hand, she agreed the Coliseum is a natural site for a studio. "They pay more rent than you think they do they and add stability," she said.

Edward A. Friedman, president of Newmark Retail Services, said he concurred with the city's plan to seek out other uses for a fail-back position. But, he noted, "The right thing to do after you go through with this is to make a deal with Zuckerman."

He thought it would be a terrible precedent to have allowed Zuckerman to expend all the money and stick it out through the lawsuits only to end up with nothing, a sentiment expressed by many others in the real estate industry. "The problem is that Zuckerman paid too much money," he added.

Friedman said the biggest obstacle to a redevelopment of the Coliseum site is the tremendous amount of money to put it together.

He thought there may be a need for exhibition hall type space and on a long term basis there could be several interesting types of tenancies. "If you put in a Nordstrom and a whole gamut of retail and made it one-stop shopping it would be very dramatic and successful but only because it's large," he added. Friedman did not think Sears would be the right tenant, and while Wal-Mart would be "greatly successful" the company wouldn't pay the rents in the area.

Rents are $80 to $90 a square foot at ground level, Friedman noted, and even if they were taken down and a developer could get all kinds of "goodies" from the state or the city, he said, the numbers won't work for a major department store.

Instead, he felt a combination of a retail mail and apartments might be successful. "It's a beautiful site for apartments. That was the original idea."

Leslie Himmel, a principal in Himmel + Meringoff Properties, decided not to make a formal proposal. "What I was concerned with," she explained, "was being dragged into a process that would take so much time that I couldn't rationalize spending the man hours to make a proposal."

Meringoff noted that the MTA has not yet totally rejected what they have now, which is the Coliseum Center. "Zuckerman is in there and has spent a lot of money to be kicked out at this point," she added.

"It's a unique site," said Fox, "in that it could go in all kinds of directions."
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Title Annotation:proposals solicited for rental of Coliseum at Columbus Circle, New York, New York
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 5, 1993
Previous Article:Hip-hop retailer to open first Big Apple location.
Next Article:Cindi Davis.

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