Lease renegotiation allows owner to sell, retailer to stay
1/10/2014 | Real Estate Blog
Fans of retailer Anthropologie will be happy to learn that the store will not be relocating from its Rittenhouse Square location. The purveyor of women’s clothing and household accessories has reportedly negotiated a new lease with Philadelphia Urban Investors LP that should be a win-win for both landlord and tenant.
1801 Walnut St. has been home to Anthropologie for years. The retailer, a division of Philadelphia-based Urban Outfitters Inc., was paying rent well below market rate and had a few years left on its 34-year lease. The landlord realized last year that it could not sell the building without raising the rent, and that could have meant having to find a new tenant.
It’s a great location, and the store takes up several floors of the old townhouse. While signing a new tenant might not take long, the landlord was likely looking at a time-consuming and costly process to remove Anthropologie and install a replacement. The alternative was to try to sell the building with a low-paying tenant — not an attractive prospect for buyers.
Now the store has signed a 10-year lease with terms that neither party is willing to disclose. Chances are good, according to one broker, that the new rent is lower than the landlord’s original ask of $2 million per year. Half that amount, the broker said, would be a good deal for the landlord; that deal would represent a 300 percent increase of the rent under the old lease.
Just to get an idea of how much commercial property values in Center City have gone up over the past 20 years, the current asking price of $35-40 million is 40 times the amount the owner paid for the site back in 1995.
Source: Businessweek, “With new lease, Anthropologie is set to stay at 1801 Walnut,” Jan. 8, 2014