In a pair of unrelated transactions, the Midtown-based Jackson Group paid a total of $20.6 million for two retail properties in the West Village that are currently occupied by sex shops. The company, led by Ike Chehebar and his brothers Elliot and Gabriel, expects to replace the tenants with more mainstream retailers.
Jackson purchased the retail condo at the base of 333 Sixth Avenue, a residential building at West 4th Street, for $16.5 million, in an off-market deal that closed on April 10, Ike Chehebar told The Real Deal. Two months ago, the firm purchased the one-story building 192 Seventh Avenue South, at West 11th Street, for $4.1 million on Feb. 7, city records show. That deal was broadly marketed.
Mark Gjonbalaj, a senior associate at commercial sales firm Marcus & Millichap, was the exclusive listing broker on both transactions.
The Sixth Avenue condo, sold by Cornelia Commercial Holding, is currently occupied by a Papaya Dog and the risqué stores Fantasy Parties and Fantasy Tattoo. The well-known sex store Crazy Fantasy closed its doors with the sale and vacated as part of the purchase agreement. The condo unit has just over 4,000 square feet on the ground floor and 2,400 square feet on the lower level
Chehebar said he expected to boost the rents significantly in the neighborhood, where 24-hour retail is common.
“I am getting close to $300 [per square foot] and taking it to $500-plus,” he said.
“You get the Times Square foot traffic without the $2,000 [per square foot rents],” he boasted.
He was putting together a list of potential tenants he would like to lure to the space, such as lingerie retailer Victoria’s Secret, cosmetics chain Sephora, sweet shop Dylan’s Candy Bar, fast fashion seller Aeropostale and sport retailer Under Armour.
Retail rents have been rising in the area, Gjonbalaj said.
“It’s a very high-traffic location,” he said, near New York University and the West 4th Street subway station.
Chehebar said the company had more intense redevelopment plans for 192 Seventh Avenue South which his firm bought from Tilou Realty. He has made an application to Landmarks Preservation Commission to add several floors to the one-story building that has 4,500 square feet of additional air rights. The tenant Fantasy World, which sells sex toys and related products, has a number of years left on its lease, Chehebar said.
“They didn’t really want us here,” said Aileen Baez, who has been a sales clerk at Fantasy World for 10 years, referring to the local residents. “It took a lot to get this open because people don’t want a sex shop in their neighborhood. But we’ve never had any problems.”
However, Chehebar hopes to replace that tenant as well.
“We hope to reposition that asset with a high-end, value-add tenant — something along the lines of Nespresso,” Chehebar said.