Billboardreports that Virgin Entertainment will be closing its Time Square Megastore. Billboard says the store is the highest volume music store in the United States. Vornado plans to lease the space to Forever 21.
The store has been at the center of speculation since August 2007 when the Virgin Entertainment Group North America was acquired by two real estate companies - the Related Cos. and Vornado - in a joint venture.
Last June, a Vornado executive told Reuters that the store would shut down in the first quarter of 2009. The decision to close the store appears related to real estate and the value connected to the location. That executive was quoted as saying that Virgin pays only $54 per square-foot when the market rent in the area is about $700 a square foot.
So, while the store, which does an estimated $55 million in annual volume, is profitable to the tune of $6 million, according to sources, the space would be even more profitable for its owner with a higher rent tenant. Vornado bought the 180,000 square foot retail component of the Bertelsmann building, which houses the Times Square store, in 2006, and will lease the space to Forever 21, according to press reports.
The store will close and April and then Forever 21 will take over the lease.
