Wall Street Journal (wsj.com)
By JOSH BARBANEL
November 2nd, 2011
In TriBeCa, factories, lofts and offices have been disappearing for years, replaced by sprawling condos and co-ops for the well-to-do. But in an unusual switch, a boutique retailer paid $14.5 million for a landmark six-story building on Franklin Street that had been scheduled to be turned into luxury apartments.
The six-story building at 177 Franklin St. in TriBeCa, center. Now the building will be used for retailing, showrooms and offices for designers and other staff for a number of boutique retail brands. Steven Alan, a clothing retailer with a classic American bent that has 11 retail stores, will move corporate and designer offices there.
The listing broker, Maria Pashby of Corcoran Group, marketed the space as the potential site of a 12,000-square-foot mansion, hoping a Wall Street titan would buy it for a home. She created a website with palatial architectural plans including a swimming pool and a private theater with stadium seating. Instead, the newly restored neo-Grec style building that dates to 1890 was picked up by Bedrock Brands, a Texas company with an investment in Steven Alan and other retail brands.
Steven Alan, founder of the boutique clothing brand, said Bedrock would use the ground floor space for the launch or rather re-launch of a once-famous American brand: Shinola, originally a shoe-polish company that is best known today for a salty aphorism about human ignorance.
Bedrock has filed for trademark rights over the Shinola name for a multitude of products from shoe polish to cosmetics, handheld electronic devices, jewelry, leather goods, clothing, toys and sporting equipment. The decision to buy a building rather than rent was also notable because Bedrock Brands paid $5.5 million more than the $9 million the same property was sold for in a deal that closed in June. Edward Lederman, a broker at CBRE, said the previous sale had been negotiated more than a year before it closed, and was the result of distress sale by a church that had renovated the space.
Bedrock is owned by Tom Kartsotis, founder of Fossil, a $6.3 billion fashion watch, jewelry and fashion accessories company. Mr. Kartsotis declined to discuss the details of his plans for the Shinola brand. Adelaide Polsinelli, a broker at Marcus & Millichap who isn’t involved in the deal, said the impulse to buy rather than rent commercial space at 177 Franklin reflected the strong demand for retail condominiums, where retailers can be protected from the vagaries of landlords and the market and receive tax advantages as well.
Glad Tidings Tabernacle paid $11.55 million in 2008 for the property, after selling a church building that dated to the 1860s on West 33rd Street for $31 million a few weeks earlier. That church was demolished and is being replaced by a 22-story hotel. Glad Tidings spent millions to renovate the Franklin Street space, but later decided to sell to repay debts. “They were in distress and sold the building to the highest bidder,” said Jennifer Polovetsky, a lawyer for the church.
In June the church sold the property to buyers who filed plans to turn it into four apartment. Ms. Pashby said these buyers had planned to live in part of the space, but changed their minds, after the closing was delayed for a year because of a tangle of liens on the property, and put it back on the market. The church modernized the interior and won permission of the Landmarks Preservation Commission to restore exterior brick and ironwork, according to filings with the commission.
Mr. Alan already has a store and a showroom in TriBeCa. He said that walking down the street still finds it a bit strange to see people living on the ground floor of what were obviously commercial spaces.