Barneys may have to pay double its current rent at its Manhattan flagship under a ruling by a New York City arbitrator.
The decision, which came down on Friday, grants Ashkenazy Acquisition Corp. a rent hike to $30 million, The Post has learned exclusively.
The 10-year deal for the 660 Madison Ave. store is approximately double the current rent of more than $16 million. But Barneys is responsible for other expenses, including property taxes, bringing the total bill per year to more than $44 million. Barneys is unlikely to move to another large location, as its lease ends on Jan. 31, 2019.
“While we are disappointed in the decision,” Barneys said in a statement, “our customers remain our top priority and we are committed to providing them excellent services, products and experiences at our Madison Avenue location.”
During the contentious yearlong arbitration process, Barneys threatened to file for bankruptcy protection if its rent rose significantly, according to a source.
The retailer “argued that its rent shouldn’t go up because the real estate market had gone down,” said the source.
Barneys signed a lease in 1989 to occupy more than 275,000 square feet, comprising the retail base of the Madison Avenue condominium.
At that time, department stores were thriving and Barneys had plenty of pricing power. But today the industry is downsizing with another massive retailer — Lord & Taylor on Fifth Avenue — closing entirely at the beginning of 2019. Barneys has also had financial struggles, filing for bankruptcy protection in 1996. More recently its hedge fund owner, Richard Perry, sought to sell a minority stake.
It’s possible that Ashkenazy may take back a portion of the space, as the store consists of two adjacent buildings and divides well, said a real estate executive who did not want to be identified. But another executive doubted that Ashkenazy would make that change.
Ashkenazy also owns Barneys in Beverly Hills, Calif., where the rent is in arbitration, and the landlord would likely want to keep a good relationship, sources speculated.
“I hope they find a way to reconfigure the space so that Barneys can stay on Madison Ave.,” said Joanne Podell, a vice chairman at Cushman & Wakefield. “They are an important retailer and anchor on Madison Ave.”
Ashkenazy’s principals did not immediately respond to a query for comment.