A company that sells used schmattas is getting a premier spot in the Fulton Mall area of Brooklyn.
Second-hand store Unique Thrift Store has inked a deal to move into space that was supposed to be a Steve & Barry’s store at 408 Fulton St.
The space totals 30,000 square feet and includes the basement and ground, second and third floors of the former Woolworth Building.
Jack Terzi of Terzi Real Estate brought the Little Canada, Minn.-based chain owned by Apogee Retail to the property, which is owned by retail maestro Jeff Sutton.
Terzi said he used to have problems getting building owners to take his calls about the thrift shop, which buys goods like books, furniture and clothes from non-profits, spiffs them up, and resells them for bargain-basement prices.
“Now they are happy to talk,” said Terzi of building owners. But he added rents “haven’t come down enough.”
Apogee plans to open a store in the Kingsbridge section of the Bronx, near Riverdale, and Terzi is seeking more economically friendly outlets in the boroughs.
The Brooklyn location is not without some controversy. The Post reported in December that Sutton sued Steve & Barry’s claiming co-founders Steven Shore and Barry Prevor misappropriated $1 million that Sutton forked over to the duo to renovate the store and install escalators and elevators.
Sutton had provided the financing just 47 days before the retail chain filed for bankruptcy. It has since shut down.
The lawsuit claims that Sutton was misled about Steve & Barry’s financial health, and that the retailer fraudulently obtained tenant improvement funds for a lease based on fraudulent books and records.
Sutton has since gotten back the keys to the retail space, which in addition to a new tenant also has new escalators and elevators.
Sources said the asking rent for the store was $35 million over 15 years.
With sublease space pushing toward 3 percent of the available office market, beautifully outfitted former financial-services space is taking a toll on local rents.
David Dusek, senior managing director of the tenant rep brokerage Studley, said smaller companies are taking advantage of subleases because the terms are now way below what is being paid to the building owner.
“It’s effectively 50 cents on the dollar to what the sub-landlord is paying,” said Dusek, who repped Ironshore in two sublease deals we reported last week at 55 Broadway.
Grubb & Ellis reported yesterday that sublets account for nearly 30 percent of the available space in the market and that rents fell $15 a foot in 2008 to $54.20 per foot.
While the average sublet asking rent is $51.98 a foot vs. the average asking rent of $69 a foot, the taking rents can be 35 percent less than asking rents.
Cushman & Wakefield said Manhattan has 25 blocks of 250,000 contiguous feet available.
Meanwhile, a recent report by Tenantwise claims that the government’s Troubled Asset Relief Program is contributing to falling office rents by effectively subsidizing the financial companies that have the space to spare and enabling them to charge less than what would other wise make the market.
“If they didn’t have the TARP behind them they wouldn’t have the money to offer outsize work letters” said M. Meyers Mermel, CEO of Tenantwise and a competing building owner.
To sweeten the sublease deals, TARP-funded work letters being offered to tenants range from $100 to $200 per foot, up from a “regular” $45 to $55 a foot.
As a result, Mermel said it is “having a depressing effect on what tenants will pay.” [email protected]