Retailers blast U. for lease options

Merchants in The Book Store building say the University's lease offers are unreasonable. Merchants in The Book Store building received bad news last November when the University announced it would tear down the facility at 38th Street and Locust Walk to make way for a new, 300,000-square-foot Wharton School building. Since then, the news has only gotten worse. Despite what University officials described as attempts to provide space for the displaced merchants, many store owners and managers accused the University of either offering space at extremely high rents or offering no space at all -- a move that could force some of them out of business. "I believe it is rhetoric when they are saying they want us to stay," said Lois Green, co-owner of University Jewelers. But the situation is even bleaker for the remaining stores in the complex that have yet to be offered space by the University. According to Penn Managing Directof of Real Estate Tom Lussenhop, the University does not plan to work with all of the tenants, citing over-representation on the Penn campus and limited space. He said the University is encouraging other tenants to "be creative" and find space on their own. But according to Ruth Perez, branch manager at STA Travel, finding space in University City is a difficult task. And at Vibes Music, District Manager Paul Carson said he has not received an offer from the University. Still, the store is trying to relocate within a two-block radius. The end of the semester may also be the end for The Seed, a health-food store, and Fiesta Jr. Pizza. If these merchants do not receive space from the University, owners said they will go out of business. So far, Penn has offered space to three of about eight businesses in the building, including University Jewelers, according to Lussenhop. The Pennsylvania Book Center -- a popular independent bookstore -- and classical music store Classical Choice have received offers as well. None of the stores has signed a new lease yet. "We focus our efforts on those tenants that have a unique identity," Lussenhop said. The Penn Book Center has been at its current location for 35 years, and many professors order textbooks through the store. University Jewelers has been at Penn for about 60 years, while Classical Choice attracts classical music fans from all over University City. According to Howard Gensler, an owner of Classical Choice, the University is charging more than double the rate of other local real estate agencies for the new spaces. The University offered him a third of the former Sam Goody site at 3401 Walnut Street for $31 per foot, Gensler said. Penn would also get 6 percent of the store's sales above a certain amount. In searching for space in Center City, Gensler said he received three separate offers of $12 per foot, $15 per foot and $18 per foot. None of the offers included a percentage of sales, he said. Gensler, a member of the Daily Pennsylvanian Alumni Association Board of Directors, said the store will either move to 21st and Walnut streets or to a University-owned site in the Hamilton Village shopping center on 40th Street, pending further negotiations with the University. Lussenhop countered that such "percentage-rent" clauses are "standard? in most leases" and "provide market feedback to the property owner." Green and her husband said they received a similar lease offer last Friday for another third of the Sam Goody site at 3401 Walnut Street. They described the offer as "preposterous" and "undoable." "They are trying to be my partner in the business," Fred Green said. Lois Green said she does not know what lies in the future for the Penn landmark, adding that a new University lease would be "something where we can lose our shirts." Lussenhop would not comment on the offer, saying only that "we have had a successful working agreement with" University Jewelers. A few stores away, the Penn Book Center has been offered space on the 3900 block of Walnut Street, in the building that houses the Cinemagic movie theater. But co-owner Achilles Nickles said that the move is far from definite, stressing that the store's owners have only signed a non-binding letter of intent.