Vornado Realty Trust has completed a 17 year lease for all 12 floors at 34th Street, confirming that Amazon is increasing its footprint in Manhattan, and further fueling speculation that the company will open its first retail store. The office building is in the Penn Plaza District where Vornado owns approximately 9 million square feet of commercial space.
"We have leased this building primarily as corporate office space and we intend to sublease to other tenants the ground floor retail space," Amazon spokeswoman Kelly Cheeseman said in a statement. Reports last month indicated Amazon was planning to open an experimental retail store in New York, which would showcase a few of the retailer's flagship products, according to a Business Journal article. Amazon could also use the space as offices for its growing publishing arm. That would be incredibly controversial in the publishing capital of the world, where many publishers set up shop. Amazon had a recent battle with Hachette Publishing Group over ebook pricing.
"While details were not published regarding the lease-term and the strategy (same-day pick-up vs. retail-orientation, for example), should Amazon view the branding and same-day convenience benefits of retail stores as significant enough to roll out more in the future, the omni-channel retail spectrum would essentially be complete," said Paul Morgan, research analyst at MLV & Co. This would "assuage investors concerns about long-run shopping center demand and reemphasize the centrality and stability of bricks-and-mortar retail and retail REIT portfolios."
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