You’ve heard of mortgage contingencies. How about a Whole Foods contingency? The organic grocery store is so popular that at least one retail tenant on Brooklyn’s Fourth Avenue insisted on a lease that voids the deal if the under-construction Gowanus Whole Foods fails to open by a certain date.
Montreal-based Blinds to Go, a window-treatment retailer, signed a lease in May for 4,200 square feet of space at 340 Fourth Avenue, but the deal is contingent on the opening of the incoming Whole Foods.
That type of arrangement is common in shopping centers, but rare in noncontiguous retail spaces, said Schuckman Realty managing director Ari Malul, who represented both the tenant and landlord BPY Capital in the deal.
“I have not heard of a deal in the 11 years I’ve been doing this where one deal was contingent on another outside of a shopping center,” Malul said.
Malul said when he first suggested the Brooklyn location to Blinds To Go, the proposed Whole Foods was the subject of complaints from local residents and questions about the site’s zoning. That made the tenant nervous that the grocer wouldn’t end up opening. Without Whole Foods nearby, Blinds to Go feared it would have trouble drawing customers to the still largely industrial area.
“They were hesitant,” Malul explained. “Even though Whole Foods had possession of the site and it looked like they were beginning work, there was no guarantee they’d actually be able to open. So it became apparent that we’d have to ask the landlord to treat it as if it was a shopping center and make one deal subject to the other.”
After hammering out the details, BPY agreed. Under the terms of the deal, if the Whole Foods does not open by a certain date (which Malul declined to disclose), Blinds to Go has the option to terminate the lease.
In the end, though, it turned out to be mostly a moot point. By the time the lease was signed, Whole Foods “was really up and out of the ground,” Malul said.
The grocery store is slated to open in mid- to late fall, according to a company spokesman, and Blinds to Go is aiming for a first-quarter 2014 opening.