Bankrupt store eases congestion

Real Estate Weekly, April 11, 2001 by Parke Chapman

Discount apparel chain Labels For Less has filed for Chapter 11 bankruptcy. The chain, with 14 stores in Manhattan, plans to liquidate, per court filings.

Though irksome to bargain clothing seekers, it is great news for retailers looking to rent in this tight market, especially those who'd like some lucrative 34th Street space. Labels for Less rents a 25,000 SF store on 34th Street that is the largest of their Manhattan stores. A spokesman from the chain's main office did not return calls for comment.

Some real estate sources have speculated that their 34th Street headquarters were, in effect, a white elephant.

"Their presence here at 40 West 34th Street might have been a mistake," said Faith Hope Consolo, vice chairman of Garrick-Aug Worldwide, a retail leasing firm. A tighter discount apparel market could have put the chain in the red, says another retail source.

"There certainly has been an increase in competition in this market. But their smaller stores were doing quite well. 34th street is just tough," says Robin Abrams, executive vice president of Lansco, retail services group. Her firm handles retail leasing for 40 West 34th Street.

According to CoStar, the basement, ground, second, third and fourth floor are all vacant. The total retail space is 26,430 SF.

"It was the wrong leasing decision for them to be here," said Dan Pisark, vice president of retail services for the 34th Street Partnership, a BID.

"With stores like H & M, Old Navy and Zara, Labels for Less was out of step here. But the good news is that, for the right retailer, this is a showcase location," said Pisark.

Consolo identified outlet stores as another bitter pill for the bankrupt chain. "These other stores just have a better selection than Labels for Less," said Consolo, who added that consumers want to pick and choose" in this market.

The chain's fourteen stores are scattered throughout the city, from Wall Street north to 96th street. None of the sources quoted felt that another chain would absorb all fourteen locations.

"I think that most of the smaller stores will be rented independently," said Abrams.