NEW YORK – The Barneys New York Chelsea site could have easily become another grocery store or bank.
It turns out the landlord is Chaim Katzman, chairman of Gazit-Globe and its parent Norstar Holdings, a major developer and operator of strip centers around the world, typically anchored by supermarkets. Katzman has an operating philosophy of stacking his properties with drugstores, banks and supermarkets to make them “necessity-driven” with a practically guaranteed flow of shopper traffic.
As a tenant, “Barneys is quite unique,” Katzman told WWD. “Quite different from our bread and butter.”
His firm bought the building, located on Seventh Avenue between 16th and 17th Streets, in 2011, when it was leased to Loehmann’s. When its business turned sour, Loehmann’s sought to get out of its lease. “That’s when we immediately started to look for a replacement,” he said.
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Katzman recalled: “We were not oblivious to the fact that this location was part of the historic past of Barneys.” Katzman added that the then-chief executive officer of the Equity One subsidiary of Gazit-Globe, Jeff Olsen, approached Barneys to get the conversations rolling and put together a deal. Katzman declined to say how much rent Barneys is paying.
Asked to what degree he chipped in to build the new Barneys in Chelsea, Katzman replied, “Minor stuff. We gave it to them in shell condition. We gutted the place.”
Katzman’s other Manhattan tenants don’t compare to Barneys. He’s got a CVS drugstore on Second Avenue between 64th and 65th Streets and a Food Emporium on Third Avenue and 69th Street. He characterized the strip center sector as a “steady, slow-growing business doing fine.”
He acknowledged his business has been impacted by the Internet but less so than other retail real estate developers considering the essential makeup of his centers – food, banks, drugstores and other necessity-driven, service-oriented businesses.
Gazit-Globe has 540 properties in more than 20 countries representing more than $22 billion in assets under management and control. Last spring, Gazit-Globe, which is based in Tel Aviv and publicly traded, bought Norway’s second-largest commercial real estate company, Sektor Gruppen, for $1.62 billion. In the U.S alone, Katzman has 130 properties. “A good bunch offer redevelopment and expansion opportunities,” he said.