The struggling Plaza Hotel in New York has recently suffered a major blow to its converted retail section as its leading retail tenant, Demel Bakery, threatens to bolt off the property after filing a lawsuit against the building’s developer for fraud.
Representatives for Demel Bakery have said that they have struggled in a location that has failed to live up to its promise of attracting high-end retailers and shoppers.
Demel has recently filed a lawsuit for fraud against Elad Properties claiming that the company used the old “bait-and-switch” technique to lure the eatery to The Plaza’s shopping area after promising that they would be neighbors to various luxury retailers like Louis Vuitton, Gucci, and Harvey Nichols.
Instead of delivering on their promise, Elad Properties provided Demel with a basement space “populated with unknown retailers…and vacant spaces,” according to the lawsuit.
Demel is the only eatery located inside the Plaza’s 160,000-square-foot shopping area, and they may very well nullify their lease agreement and leave The Plaza within the next few weeks.
Sources said if Demel breaks their 10-year lease agreement, it might very well spark other retailers inside the complex to consider doing the same. It is important to note that Demel stopped paying rent on the space in February 2009.
Israeli billionaire Isaac Tschuva, who owns Elad Properties, bought The Plaza Hotel in 2004. Shortly after making the purchase, Tschuva gave the go-ahead for a $450 million renovation that converted part of the hotel into 181 luxury condominiums and added The Shops at The Plaza.