Two subsidiaries of luxury retail brand Neiman Marcus Group claim they are owed $50 million from a subsidiary of Simon Property Group Inc., the owner of Copley Place in Boston’s Back Bay, over Simon’s failure to develop a residential tower above the Neiman Marcus store at the shopping mall several years ago.
In a lawsuit filed by attorney Kurt Fliegauf in Suffolk Superior Court on Tuesday, Neiman Marcus alleges it was required “to vacate a part of its store and significantly reorganize the remaining portions, including building temporary walls and reducing or eliminating certain departments,” moves that would create subpar shopping conditions in the short term, but ones they agreed to “in exchange for obtaining a larger, fully renovated store and new lease terms.”
After nearly a decade of work on the project, Simon Property Group in fall 2016 told investors it was giving up on plans for the tower above the Copley Place Neiman Marcus and an underground section of the Massachusetts Turnpike due to rising construction costs as well as an inability to obtain required state approvals. After Simon pulled back from its plans, the state reevaluated and streamlined its air-rights approvals process, as the Globe recently reported.
Simon did not tell Neiman Marcus of its plan to cancel the tower project, the retailer alleges, and “now, almost six years later … the Copley Place Neiman Marcus remains in its reduced and temporary condition, which continues to have a significant impact on sales and profits. Neiman Marcus says it is “entitled to the benefits of a new, fully renovated, modern store,” along with $27 million that Simon subsidiary Copley Place Associates had agreed to contribute toward the renovations.
Neither Neiman Marcus, Simon nor Fliegauf responded to requests for additional comment.