Donald Trump’s private real estate empire officially lost one of its most important tenants on Monday, when Nike announced that it is closing its store at the president’s 6 East 57th Street property in New York City next spring in favor of a new location just a few blocks away. The announcement comes a year after commercial landlord SL Green disclosed that it had signed a 15-year lease with Nike at 650 Fifth Avenue.
Of all of the commercial properties in President Trump’s portfolio, the site known as Niketown is by far the largest occupied by a single tenant. With Nike leaving, the Trump Organization is left searching for a new identity at the marquee property, which Forbes estimates is worth $253 million.
The building comprises roughly 65,000 square feet of space just off of Fifth Avenue, in the middle of one of the most famous retail corridors in the world. But as Amazon and other e-commerce sites grab more business every year, the value of retail real estate in the neighborhood continues to fall. That Trump controls Niketown, which is just around the corner from Trump Tower, only further complicates things.
“I don’t know of any tenants that need that much space other than department stores,” said Eric Anton, a Manhattan real estate broker at the firm Marcus & Millichap. “And I don’t think there are any expanding department stores. Maybe Harrods comes in and takes it. But any foreign group is going to be looked at as weird – you know, collusion or some kind of crazy Trump conspiracy theory.”
Domestic retailers might also look for other sites in a New York City borough where only 10% of the population voted for Donald Trump. Tiffany’s, which owns the site next door to Niketown, said “post-election traffic disruptions” helped cause a 14% drop in sales during the 2016 holiday season.
Still, 6 East 57th Street remains in the heart of New York’s commercial district, which draws tourists from all over the world. “You’ve got the best retail on the planet within 100 feet in every direction,” Anton said. “Maybe you cherry-pick one of the tenants that’s coming out, you know. You’re definitely going to do a new facade. They’ll scrape that facade off and they’ll build something really interesting.”
A spokesperson for the Trump Organization did not respond to a request for comment.
Whatever the Trump Organization ends up doing, it won’t be under much pressure from lenders. The Trump Organization, which owns a ground lease on the space through 2079, recently paid off its debt on the property. The president’s business also owns office and retail space at Trump Tower. The largest tenant there is Gucci, according to a 2012 Securities and Exchange Commission filing, which has a lease that expires in 2026.
Since the announcement of Nike’s new agreement with SL Green, many have speculated that the move out from the shadow of Trump Tower was at least in part driven by Trump’s divisive political rhetoric. Nike spokeswoman Ilana Finley declined to address whether politics played a role in the decision, saying that the company had been planning a move “for years.” The new space “gives us more opportunities to play with new concepts than we have now,” Finley said.
Two employees said that while Trump’s political rhetoric played a minor role in Nike’s decision to leave, the physical layout of the store was a bigger factor. “It is mostly due to space constraints, more than any political implications,” said one current Nike employee, who requested anonymity to speak about matters they weren’t authorized to discuss.
Another employee, who also requested anonymity, said that store designers at Nike “hated” working on displays there. “It’s just tight. It’s hard to do what we want to do there.” The employee said that being associated with Trump’s name was also “a factor, to some degree.”
Some former Nike employees, meanwhile, scoffed at the notion that Nike’s move was in part politically motivated. “We never did anything when I was there that was even remotely political,” said Ed Stair, a former vice president of real estate and store construction who worked for Nike for more than a decade.
Nike will close its current space sometime in March 2018, the company said. While the new store won’t open for another year after that, customers will still be able to shop at the company’s stores in the SoHo and Flatiron neighborhoods. – ,