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.
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.