Old Navy's NYC Return: A Strategic Move in a Landmark Retail Lease Battle

The retail landscape of New York City is undergoing a seismic shift, with Old Navy’s planned 2025 reopening of its Times Square store juxtaposed against Primark’s record-breaking lease in Herald Square. While Old Navy aims to reassert its presence in Manhattan, the title of “biggest NYC retail lease of 2025” may ultimately belong to its fast-fashion rival. This article dissects the financial implications of these moves for investors, highlighting risks and opportunities in a competitive urban retail market.

The Old Navy Revival: A Legal and Financial Gamble

Old Navy, a subsidiary of Gap Inc. (GPS), is set to reopen its 31,000-square-foot Times Square store by 2025 after a five-year closure triggered by pandemic-related losses. The lease, originally signed in 2015, carries a monthly rent escalating from $1.5 million to $2.3 million by 2032. However, this comeback is no sure bet. A $24 million back-rent judgment from a 2020–2024 legal battle with landlord Charles Moss underscores the financial strain Gap has faced.

Investors should note that Old Navy’s Times Square store operates in a high-risk, high-reward environment. While the location’s prime foot traffic (adjacent to the Gap flagship) offers growth potential, rising rents and post-pandemic consumer caution could limit profitability. Gap’s stock, which has fluctuated between $15 and $30 since 2015, reflects this uncertainty.

Primark’s Dominance: The “Biggest” Lease Deal

The 79,000-square-foot Herald Square lease signed by Primark in 2024—a $10 million annual rent agreement—far eclipses Old Navy’s deal in scale. This store, set to open in 2026, will occupy a 54,000-square-foot retail space in a historically significant building near Penn Station. With 60 U.S. stores planned by 2026, Primark’s aggressive expansion highlights its confidence in Manhattan’s retail future.

Primark’s model—affordable, fast-fashion anchored in high-traffic corridors—appeals to price-sensitive shoppers and tourists. Its success contrasts with Gap’s struggles, as seen in Primark’s 2023 revenue growth of 14% in the U.S., versus Gap’s 1% decline over the same period. The Herald Square deal solidifies Primark’s position as a retail disruptor in New York.

Why Investors Should Pay Attention

1. Location vs. Scale:
2. Old Navy’s Times Square store targets a luxury corridor, but its smaller size (31k vs. Primark’s 79k sq ft) limits its ability to compete on volume.

3. Primark’s Herald Square location, however, leverages Penn Station’s 600,000 daily commuters, ensuring steady foot traffic even during economic downturns.

4. Financial Risks:

5. Gap’s $24 million back-rent payment (plus interest) and ongoing lease obligations could strain its balance sheet.

6. Primark’s parent company, Associated British Foods (ABF), has a strong financial backing, with net debt/EBITDA of 0.8x (well below the 2.0x threshold for distress).

7. Market Trends:

8. Rents remain 20–30% below pre-pandemic levels, offering retailers like Primark cost advantages.
9. Fast-fashion demand (up 18% in 2023) favors Primark’s model over Gap’s traditional apparel approach.

Conclusion: A Tale of Two Retailers

While Old Navy’s Times Square reopening symbolizes resilience, the “biggest lease” title belongs to Primark, whose Herald Square deal reflects a broader shift in NYC retail dynamics. Investors should prioritize Primark’s expansion as a safer bet given its financial health, scalable model, and prime location. Old Navy’s comeback, however, hinges on its ability to adapt to rising rents and shifting consumer preferences—a challenge even legacy brands struggle to meet.

For now, the data speaks clearly: Primark’s $10 million annual lease and 60-store U.S. expansion plan make it the retail titan to watch in 2025 and beyond. Old Navy’s story remains one of survival, not dominance, in a market where size—and scale—matters most.