New York City -- FAO Schwarz is seeking to extend the lease for its flagship store in Manhattan, almost three years after the landlord Boston Properties said the retailer would likely have to leave, Bloomberg reported. The store is located in the General Motors Building, on Fifth Avenue at the corner of 58th Street.
Toys “R” Us, parent of FAO Schwarz, in January exercised a five-year option in its lease, according to Bloomberg, that enables the tenant to extend the lease at fair-market value for five years. It had been set to expire in 2012. The two parties are now in arbitration over the rent for the store.
The article noted that the extension would save Toys “R” Us from looking for an alternative Manhattan location at a time when retailers are paying record prices for the city’s most-trafficked areas. But it also means that Boston Properties would lose the change to market approximately 60,000 sq. ft. of prime space in the world's most expensive shopping district.
Boston-based Boston Properties, which bought the 59-story GM Building in 2008 for $2.8 billion, declined to comment in the report.
The three-level FAO store is across the street from Central Park and the Plaza Hotel. It is located on a stretch of Fifth Avenue that has an average asking rent of $1,850 per square foot, exceeding Hong Kong's Causeway Bay shopping district's $1,664 per square foot as the world's most expensive, according to a September report by Cushman & Wakefield.