Despite what you’ve heard, Barneys is staying on Madison Avenue because they are keeping their customers their main priority.
According to a 2018 Women’s Wear Daily report, there has been speculation that Barneys would either vacate its 230,000-square-foot flagship or downsize it in face of the looming rent increase has been around for months as negotiations with the landlord Ashkenazy Acquisition Corp. were proceeding.
“The arbitration decision that came down (Friday) does grant Ashkenazy Acquisition Corp. an increase in rent although not quite to the magnitude previously reported. While we are disappointed with the decision, our customers remain our top priority and we continue to be committed to providing them excellent service, products and experiences at our Madison Avenue location,” said a Barneys official, to Women’s Wear Daily in a 2018 report.
According to a 2018 Women’s Wear Daily report, Barneys has been paying well below market rates on Madison Avenue. The rent has been set around $16 million. The lease was signed back in the late Eighties after Barneys came out of bankruptcy, and was subject to rent increases next year.
Barneys will be under pressure to increase sales and shopper traffic at the site, 660 Madison Ave., as the higher rent will eat into profits. Barneys has been developing new kinds of experiences for its customers such as thedrop@barneys featuring designer appearances and exclusive product. And business for the luxury retailer is said to have shown some uptick recently along with some other high-end stores such as Saks Fifth Avenue and the Neiman Marcus Group, according to a 2018 Women’s Wear Daily report.
The New York Post reported in 2018, the 10-year deal for the 660 Madison Ave. store is approximately double the current rent of more than $16 million. But Barneys is responsible for other expenses, including property taxes, bringing the total bill per year to over $44 million. Barneys is unlikely to move to another large location, as its lease ends on January 31, 2019.
Though Women’s Wear Daily report in 2018, one media report indicated that Barneys’ total tab to the landlord on Madison Avenue, including a doubling of the rent plus other expenses, would be $44 million, was incorrect.