Harrods May Check in at Plaza

Front-runners for the retail space that the owners of the Plaza hotel plan to create include two British department stores, Harrods and Harvey Nichols, and an American spa chain, Canyon Ranch, according to retail brokers who are working on the deals.

The negotiations with the luxury tenants are progressing even as workers at the Plaza try to scuttle plans by developer Elad Properties to convert the landmark hotel into condominiums and retail space. The employees plan to rally on Thursday to protest the closure, and they expect a turnout of several thousand - including some elected officials - a union spokesman, John Turchiano, said. Elected officials who have so far agreed to attend include Public Advocate Betsy Gotbaum and the City Council member who represents the district, Eva Moskowitz.

The 800-room hotel is scheduled to shut April 30 for 16 to 18 months to be transformed into 200 luxury condominiums, a 150-room hotel, and 150,000 square feet of retail space. As a result of the closing, 900 union hotel workers will lose their jobs, as will 200 non-union employees in managerial positions at the hotel.

Meanwhile, a source in the real estate industry told The New York Sun yesterday that the two leading auction houses, Sotheby's and Christie's, are in negotiations with Elad Properties to auction off the contents of the hotel after its doors close. The auction would take place sometime in the spring, the source said.

The auction could bring intense interest, with objects ranging from furniture designed by Frank Lloyd Wright, to the bed from the Vanderbilt Suite where numerous heads of state slept, to objects immortalized by movies such as Alfred Hitchcock's 1959 classic "North by Northwest."

Next week's rally is part of a $1 million effort by the hotel workers' union, which includes an advertising campaign and a "Save the Plaza" committee.

Talks between the Plaza employees and Elad Properties stalled this week after workers turned down the developer's offer to double their severance package if they would sign waivers stating they would have no right to return to work at the Plaza, according to sources involved in the negotiations. The severance package in the union contract gives the workers, many of whom had held out hope of returning to work at the Plaza after renovations, four days' pay for every year of employment, plus six months of extended medical coverage.

"The Plaza is the flagship hotel of New York, and anyone can walk in and eat in the restaurants, or get a room in the hotel overlooking Central Park," Mr. Turchiano said. "What they are doing is like selling a piece of Central Park."

The union, the New York Hotel Trades Council, will take "every step possible to preserve the Plaza as a hotel for all the people of New York," he said.

A spokesman for Elad Properties, Steve Solomon, said: "The owners have put in $775 million to redevelop and revitalize the Plaza, which their own union officials have called a three-star hotel at best. The owners offered a generous severance package that more than satisfies their legal and contractual obligations."

While elected officials have largely remained quiet on the topic, Community Board 5 passed a resolution last night calling for the Plaza to remain a hotel and for the interior of the building to be given landmark designation. The exterior of the building is land marked and cannot be changed, but the interior is not protected.

The union negotiations with the Plaza could collide with a visit by the site-evaluation commission of the International Olympic Committee, which is set to arrive on February 20 and stay at the Plaza during its four days in the city. The hotel workers union supports the effort to bring the Olympics to New York in 2012, and the spokesman said its difficulties with the Plaza will not affect the IOC visit.

"We fully support the NYC2012 effort and our members are delighted that the Olympic Committee is coming to New York," Mr. Turchiano said. "We will do nothing to interfere with the Olympic committee, except to make sure the IOC has the best time while they are here in NYC and hopefully choose our city for the 2012 games."

While Elad Properties is continuing to run the Plaza as a hotel until its closure at the end of April, its main focus is on the renovation plans. In addition to building and selling condominiums, which are to be sold exclusively through the Stribling brokerage, the developer is looking to sell, rather than lease, the 150,000 square feet of retail space, brokers familiar with the plans said.

The decision to sell the retail space, either to a retail investor or directly to a retailer, is not uncommon, real estate insiders said.

"Sometimes developers want to liquefy the investment, sell the whole thing off, and put all the money into the next deal," one retail broker, who asked not to be quoted by name, said.

"The benefit of selling the retail upfront is that the money is taken off the table," another retail broker, Adelaide Polsinelli of Besen & Associates, said.

Ms. Polsinelli estimated that the retail space at the Plaza, which she calls the "Tiffany of all buildings," could be sold for up to $2,000 a square foot, for a total of $300 million.

As for the likely contenders, brokers said it is more likely that if Harrods were to take retail space at the Plaza it would be for a food hall, similar to the gourmet food mart in the basement level of its flagship London store. With both prepared and fresh food, a similar store would be the right size for the relatively small retail space available at the Plaza.

Harrods has publicly denied having any interest in opening an American outpost. Harvey Nichols could not be reached for comment.

A Canyon Ranch spokeswoman, Katie Garber, confirmed that its development team is looking at the Plaza, among other sites.

"Canyon Ranch is interested in building its brand with additional properties, and our development team is exploring all the major urban markets, including the Plaza in New York," Ms. Garber said.

The most likely option for a Canyon Ranch at the Plaza would be its Spa-Club, or day spa, similar to ones it has opened recently in Las Vegas and on the Queen Mary 2 cruise ship, Ms. Garber said, adding that the company is not close to signing any deal.