(Bloomberg)—The shopping mall in lower Manhattan’s Brookfield Place has found a tenant to take over the shuttered Saks Fifth Avenue women’s store -- and it’s not a retailer.
Convene, a New York-based company that provides flexible meeting and working space, signed a 10-year lease for 73,000 square feet (6,800 square meters) -- most of the former Saks spot -- and plans to convert it into a venue for conferences, corporate meetings and cultural gatherings. That means about a quarter of the 300,000-square-foot mall will pivot away from retail when the new event venue debuts in November.
Department stores aren’t the best use of space in urban settings like Manhattan, especially as shoppers are becoming more focused on amenities, said Ben Brown, Brookfield Property Group’s head of New York.
“I joke that it’s kind of the amenities arms race in real estate right now in terms of how landlords are positioning their buildings and trying to attract tenants,” he said. “Real estate as a sector is becoming a lot more hospitality-driven, and I think Convene is at the forefront of that.”
The Saks women’s store, which was the mall’s largest tenant, closed in January after just two years because it wasn’t performing well. The new Convene venue will include two large spaces with tiered seating for as many as 500 people each, as well as a cafe and several rooms for smaller events.
Retail landlords have had to get creative as the shift to online shopping forces store closures and chains such as Sears and Bon-Ton filed for bankruptcy. One shopping center in Los Angeles is being converted into new offices for Google. Others are being transformed into apartments, hotels and haunted houses. The Convene space should help draw more foot traffic to Brookfield Place, which still has a Saks men’s store, Brown said.
Excluding Saks, luxury sales at the mall have grown every year since 2015, according to a Brookfield spokesman. That year, the shopping center reopened after a $300 million renovation, part of a bigger project at the former World Financial Center that was designed to attract new types of tenants to the complex’s office towers. Occupants include Meredith Corp., American Express Co. and Bank of New York Mellon Corp. Skyscrapers at the nearby World Trade Center have lured tenants such as Spotify Technology SA and McKinsey & Co.
“The transformation of that entire submarket is attractive,” Convene Chief Executive Officer Ryan Simonetti said. “There’s really a shortage of larger spaces that can accommodate 300- to 600-person conferences, mini trade shows, exhibits, town halls.”
Convene, founded in 2009, has raised $260 million in funding, including backing from Brookfield. The new venue space will be the firm’s 30th location nationally and its sixth within Brookfield properties.
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