The Virgin Megastore in New York’s Times Square will close down in the first quarter of 2009, according to a published report that quotes a senior executive at the Vornado Realty Trust.

That company and the Related Cos., both real estate companies, formed a joint- venture to acquire the 10-unit Virgin Entertainment Group North America in September 2007. Vornado owns 49% of Virgin, while Related owns 51%. Neither company was available for comment at deadline.

The other New York Megastore in Union Square is scheduled to close at the same time, according to the Web site of the Winick Realty Group, a real estate broker that is shopping the site’s lease.

"We bought the Virgin business to wind it down to get a hold of the real estate," Sandeep Mathrani, Vornado's executive VP and head of its Retail Real Estate Division, told Reuters.

He said that Virgin pays only a $54 per square-foot when the market rent in the area is about $700.

In general, Vornado has a dim view on retail. In the same Reuters article, Vornado president Michael Fascitelli said, “We think there's a recession going on. We think it could get much tougher in the retail sector.”

Ironically, those comments come one month after the Virgin Megastore chain announced that it had achieved one of the most successful years, which it said was notable considering the challenging U.S. marketplace.

The company said it was up 11.5% nationally since last year on a same store basis, and up more than 10% in the New York City market alone.