Times Square Virgin Megastore To Close
The store has been at the center of speculation since August 2007 when the Virgin Entertainment Group North America was acquired by two real estate companies - the Related Cos. and Vornado - in a joint venture.
Last June, a Vornado executive told Reuters that the store would shut down in the first quarter of 2009. The decision to close the store appears related to real estate and the value connected to the location. That executive was quoted as saying that Virgin pays only $54 per square-foot when the market rent in the area is about $700 a square foot.
So, while the store, which does an estimated $55 million in annual volume, is profitable to the tune of $6 million, according to sources, the space would be even more profitable for its owner with a higher rent tenant. Vornado bought the 180,000 square foot retail component of the Bertelsmann building, which houses the Times Square store, in 2006, and will lease the space to Forever 21, according to press reports.
The closure leaves the Virgin chain with five stores, and one of them, the Union Square store in New York, will now be the city's premiere record store, with an estimated $40 million annual volume. But the status of that store is also at question as the Related Cos. and Vornado leased the ground floor of the store to Nordstrom Rack for the holiday season, only to have the deal fall through.
VEG NA CEO Simon Wright says no decision has been made on the 14th Street store. While the closure of the Times Square store has wider implications for the chain's overall health, the owners and VEG NA management will assess what to do with the rest of the stores over the next few months.