Bloomingdale’s has been sued by its landlord, the Stahl Organization, for unpaid rent for its 25,000 square foot, three-level outlet at 2085 Broadway, on the corner of 72nd Street, The Real Deal reports.
According to the publication, Bloomingdale’s owes its landlord almost $2.5 million just for this location. The lease states that Bloomingdale’s will pay $437,500 of fixed rent plus a percentage of sales to its landlord. Bloomingdale’s started skipping rent payments in April, when the pandemic hit.
Macy’s, the owner of Bloomingdale’s, was also named in the lawsuit.
Bloomingdale’s has not issued a statement.
The store is currently open Sunday-Friday from 12pm-7pm and Saturday from 11am-7pm.
The website for this location states: “To protect our customers & colleagues, this location is open with limited hours, services & enhanced safety measures in place. For the best shopping experience, please call to confirm availability of services & restaurants. Thank you for your patience.”
Oh, for Pete’s sake. Landlords knew this might happen. And while I understand their frustration over the issue, it is outrageous that they would file lawsuits in this regard. Who, exactly, and particularly in the middle of a pandemic, is going to lease the space if they force out Bloomingdale’s – who, by all accounts, has apparently been a good tenant until the crisis? This is madness.
The landlord takes a percentage of sales????????
Avatar: That is actually a fairly common lease provision where “big box” and huge “chain” stores are concerned. The landlord will often allow the merchant to pay a lower monthly rent, and accept a percentage of sales instead. This usually works out well for the landlord, particularly in good times, and particularly with major merchants like Bloomingdale’s. However, if the landlord accepts that deal and the store does not do well, that is, sadly, too bad. THEY offered and agreed to the terms. And no one could foresee a pandemic that would wreck the economy. In my opinion, the landlord is entitled to only the actual back rent, and not a penny more. And I am certain that Macy’s will pay that rent when things calm down. So it is self-defeating for the landlord to sue and threaten Bloomingdale’s, since there is not exactly going to be a “run” for the space any time soon. LOL.
I am shocked that, that is legal. The greed of landlords is out of control. They should be taxed through the nose.
Well, yes, the landlords may be working from a place of greed, but that kind of lease provision can also backfire. Let’s say a merchant can meet his rent every month, and that the landlord also gets 10%, which, based on average revenue claimed by the merchant, would make up whatever rent break they were given. If, in a certain month, that 10% does not equal the “break” portion of rent, the landlord cannot demand the difference. So the landlord is counting on average claimed revenue remaining constant or higher.
The landlords are covered in all situations but the merchants are charged beyond the “break” of landlords covering maintenance and mortgages. If we want a thriving city, we cannot let the show & our commerce options be dictated by the landlords self-interest. People complain about the “mallification” of the Upper West Side. Great to know it’s all in the service of a handful of landlords’ personal portfolios.
I don’t see how the landlord is covered.
Assume a rent of $1 million per year. The landlord gives a 10% break, based on the merchant’s representation that he makes $1 million a year, and the landlord will get that “lost” 10% from revenue. The merchant makes $1 million that year, and the landlord gets the original $1 million he wanted ($900,000 in rent, $100,000 from merchant revenue). However, the next year, the merchant only makes $500,000. He is only legally obligated to give the landlord the $900,000 in rent (never mind where he gets it) and 10% of the $500,000. So the landlord only gets $950,000 instead of $1 million.
Thus, the landlord i taking a gamble on offering that type of lease provision.
You don’t need to assume anything. It’s right there in the article: yearly rent is $5,250,000 plus a take of the merchant’s profit. If those numbers don’t spell “greed,” I honestly don’t know what does. Capitalism is fun and everything, until every city in the world begins to look the same.
“Rent,” particularly commercial rent, is always what the market can bear. At the time they took the space, Bloomingdale’s knew its value: a corner spot on a major thoroughfare, directly across the street from a major subway station and four different bus stops, in a desirable neighborhood. They did not “need” to take the space if they felt the rent was exorbitant. This obviously doesn’t preclude the possibility that the landlord was greedy, but greed is useless without others to satisfy it.
And when there’s no one willing to satisfy the greed you get Broadway in its current state of dereliction. There’s no market for the greed and the landlords are still winning out with tax write-offs. What is saddest of all is the fact that landlords are removed from the community. They don’t have to live here and they don’t care what happens to the quality of life. One of our biggest supermarkets is located across the street from Bloomingdale’s. They probably also took on the lease because of its proximity to a major subway station. Over two hundred thousand people live in the neighborhood. We NEED more grocery stores.
Landlord greed is only one of three factors that have contributed to the “death” of bricks and mortar retail, and the loss of “mom and pop” stores. Another is the tax breaks that landlord get for keeping storefronts empty. (It is basically legalized tax fraud.) The other – which is much bigger than most people may realize – was the advent of the Internet and online purchasing. When people were able to but things online more cheaply, and have them delivered (usually within 48 hours), and particularly when services like Fresh Direct allowed people to do that with groceries, that was a major nail in the coffin of local supermarkets and specialty stores. Finally, add to this that the “richer folks” who have moved in over the past decade or more are all about “convenience and time-saving,” and you also realize why stores like DuaneGreed, CVS and the like have survived while others are gone: because you can get your milk, toiletries, prescriptions and other things in one place.
The internet supplied an alternative to retail prices that people were struggling to afford. Amazon, the largest online retailer, is beginning to have a large warehouse footprint that should classify it as a major chain. The reason why Amazon is still experiencing unbridled growth despite their enormous brick and mortar presence is because Amazon is not paying city rent. Businesses that provided services closed as well and it had nothing to do with the internet. City life, when planned properly, provides for discovery and a break from the algorithm forcing experiences on us. The landlords are not city planners and should not wield this much power.
I agree to some extent. However, when you say, “Businesses that provided services closed as well,” that is not entirely accurate. In fact, the service businesses are the only ones to have survived the battle: dry cleaning, hair/nail salons, locksmiths, etc. They survived BECAUSE online could not replace them. and I must repeat my comment about “convenience”: community-minded people help support “the community,” including mom and pop stores and places that may indeed charge a little more for something; convenience-minded people don’t give a rat’s ass about “the community,” no matte how much lip service they give it – they only care about themselves and their own time. What is tragic is that those of us who have lived here a long time and CREATED the “community” and the desirability of the UWS have watched as the people who came here BECAUSE it was desirable have destroyed the very community that they wanted to be part of. What a waste.
Just like Bloomingdale’s want to get paid, landlords wanna get paid. No one was aware how covid-19 would impact our economy.
Perhaps Bloomingdales will GIVE MEsome FREE merchandise.
#yeahright
Bloomingdales pay your landlord.