The $300 million dollar lease
Is the market rebounding? Signs of life are starting to pop up in the news and some dare propose the commercial market just may be coming out of its hibernation. One positive sign is that New York City just broke news of a record smashing lease: Japanese clothier Uniqlo just signed a $300 million 15-year lease at 666 Fifth Avenue (between Rockerfeller Center and Central Park). Yes, that is $20 million a year.
Fifth Avenue is famous for being the world’s most expensive shopping region. Retailers in the same area include Tiffany’s and Apple’s Cube shop, which is open 24 hours, 7 days a week.
Largest lease in NYC history
The space is about 89,000 square feet. The prior tenant was Brooks Brothers, vacated in 2008 in a business move that some landlords probably thought was nuts. The building’s owners, Kushner Companies, believed Brooks Brothers were paying less than market rate for their retail space in the 41-story building, and supposedly bought the lease out for $47 million… what a gutsy gamble that proved to be pretty darn smart.
Uniqlo is owned by Fast Retailing Co., Japan’s biggest apparel seller. They already have one shop in SoHo, and hope the neighborhood’s other high end tenants will pull business into the Fifth Avenue location, which will be its largest retail location in the world.
The rents may be high, but the higher the risk, the greater the reward. Or at least that is what Uniqlo is betting on.
Photos courtesy Mark Hillary and Ian Muttoo via Flickr.com.
Mike McGrath
April 29, 2010 at 9:44 pm
This is a HUGE vote of confidence.
Chris Rodriguez
April 30, 2010 at 12:02 am
That’s a lot of clothing to sell!
Fred Romano
April 30, 2010 at 10:31 am
This is insane!
Ryan Martin
April 30, 2010 at 4:51 pm
That is an insane lease amount. I can only imagine the annual revenue that would have to support that.
Locally, we are seeing a lot of start-ups taking on new retail, office, and industrial space. It is refreshing to see a surge in the demand side of the leasing market.
Agnes Czajkowski
May 1, 2010 at 10:45 pm
I read this post yesterday and I was truly shocked with the lease amount.
That reminds me of Transactional Analysis (a theory of psychology and psychotherapy) based on which the “inner child” of the Uniqlo decisionmakers must have shouted out: “I really want to be on Fifth Ave!!!” Hopefully someone justified this decision intellectually. 🙂
Candice A Donofrio
May 2, 2010 at 10:21 am
Very cool post, Erica–an auspicious omen for CRE practitioners and the market.
Jason Sandquist
May 2, 2010 at 11:34 am
not sure I’d want to lease something with an address starting 666…