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Spencer Hayes' Blog

By Spencer Hayes | Agent in 36117

End of An Era: Daffy’s To Close Its Doors

NEW YORK CITY-Daffy’s Inc., the Seacucus, NJ-based retail chain known for discount designer clothes, will be closing its doors over the next several months. The company – which operates 11 stores within the five boroughs – is liquidating after several quarters of financial difficulties and weakening store performance.

In a statement e-mailed to GlobeSt.com, the company says it “deeply regrets that this action was necessary due to the impact on its business of the uncertain economy and weak consumer spending, and a lack of viable financial and business alternatives.”

In total, Daffy’s has 19 locations across New York, New Jersey and Pennsylvania and approximately 1,300 employees. According to a company statement, all associates will remain employed and receive pay and benefits for at least 60 days.

The impact of the closures on the New York City retail market is uncertain, but the chain has a significant presence in the boroughs, leaving behind several large blocks of space. Daffy’s recently opened a massive 17,000-square-foot store at 218 W. 44th St. in Times Square at rents near $1,400 a square foot, and also has locations at 1311 Broadway in Herald Square; 3 E. 18th St. in Midtown South; 335 Madison Ave. in the Grand Central submarket; 125 E. 57th St. in Midtown East.; 1775 Broadway in Midtown West; 462 Broadway in SoHo, 50 Broadway in the Financial District; Atlantic Terminal in Downtown Brooklyn; and 88-01 Queens Blvd. in Elmhurst, Queens.

Gene Spiegelman, executive vice president at Cushman & Wakefield, tells GlobeSt.com that the Daffy’s store closures will provide landlords with the opportunity to recapture ground floor space and reposition the real estate at a higher value. “They are located in really excellent located positions, and they are actually going to free up some spaces that will help landlords reposition some buildings,” he says, noting that the ground floor space at 125 E. 57th St. is already available, and now with Daffy’s coming on-line, the landlord will be able to reposition all levels of the building, from ground, basement and mezzanine. “It’s something that the landlord always had a desire to do. Daffy’s exercised an option in that building some years ago, so I think that’s going to bring the opportunity to really reposition that whole corner.”

And like the 57th Street space, Spiegelman adds that the Daffy’s locations coming on the market at 335 Madison Ave. in Midtown East and 3 E. 18th St. in the Flatiron District would be highly sought after as well. “If you look around Midtown, how many blocks of space of that size are available? The answer is very few, so it just offers another opportunity for other retailers to step in and for the landlord to reconfigure the space,” he says.

The first Daffy’s store – once called "Daffy Dan’s Bargain Town" – opened in 1961 in Elizabeth, NJ by retailer Irving Shulman. From there, the family-run business expanded beyond New Jersey into new markets, but reports show that the company had recently failed to pay its vendors.

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