Byline: Mark Tosh

NEW YORK — Looking to secure its second Manhattan location, Kmart is reportedly close to concluding a deal for space at 770 Broadway in the East Village, the site of a former John Wanamaker’s store.
According to sources close to the scene, Kmart Corp. officials are expected to meet here this week with representatives of Helmsley-Spear Inc., owner of the building, to wrap up months of negotiations for 150,000 to 160,000 square feet of space.
The 13-story building, which is partially vacant on the main level, occupies the entire block between 8th and 9th Streets and Broadway and Fourth Avenue. The site is five blocks south of Union Square, which is bustling with new retail tenants. Bradlees and Toys ‘R’ Us are among the recent entries and a number of other retailers, including Sears, Roebuck, Sports Authority and Caldor, also are vying for space in the Union Square area.
Meanwhile, the hot interest many chains are showing in New York could heat up even more, if Mayor Rudolph Giuliani has his way, and opens waning industrial zones to large-scale retail development without the current requirement of a special permit. Request for such permits are often vigorously contested by small independent retailers and neighborhood groups. Giuliani’s proposal, which he outlined Saturday and which needs approval of the City Planning Commission and the City Council, could cause similar controversy.
In its first move into Manhattan, Kmart, though, is settling into one of the borough’s busiest shopping areas. As reported, it will open a 140,000-square-foot store at One Penn Plaza on 34th Street between Seventh and Eighth Avenues by around Thanksgiving. The location is catty-corner from Macy’s Herald Square.
Last week, a Kmart spokeswoman declined to comment on the 770 Broadway location, saying only that the firm is “looking at several sites in the city.”
Officials at Helmsley-Spear Inc. could not be reached for comment.
According to sources, however, a deal hinges on whether Kmart can get space for an entrance on Broadway.
Chemical Bank and Republic Bank for Savings currently occupy the entire Broadway side of the building. The back of the building, along Fourth Avenue at Astor Place, is not occupied and also could serve as an entrance.
The discounter would take three or four levels in the former Wanamaker building, making it Kmart’s largest conventional discount store in the continental U.S.
One real estate source confirmed that Kmart also is “looking at a lot of other sites” in Manhattan now that it has designed a multi-level store format.
Its store at One Penn Plaza will be spread over four levels, including a below-ground opening onto the recently renovated Long Island Railroad concourse. Helmsley-Spear, manager of One Penn Plaza, assembled 27 separate spaces for Kmart.
Sources said the vacant site on the southeast corner of Union Square and 14th Street could become a mixed-use project featuring many specialty retailers, possibly Sports Authority, Virgin Records and a movie theater group, the source said. That scenario would exclude a major anchor such as Caldor or Sears, both of which are reportedly eager to get in there. Jeff Blau, vice president of The Related Cos., which is developing the site, could not be reached for comment.