NEW YORK CITY-Thor Equities has closed on its purchase of the retail space at 680 Madison Ave., the landmark Carlton House, the company announced Wednesday in a press release. The firm clearly is bullish on consumer spending, since the purchase price is among the highest total prices ever paid for a retail property on the street, according to the Wall Street Journal.
Thor’s founder and CEO Joseph Sitt, a noted retail landlord in upscale and trendy shopping areas such as SoHo and the Meatpacking District, beat out Vornado Realty Trust on the buy, the Journal reports. The latter firm allegedly offered to buy at $280 million but negotiations on the deal fell apart, the paper says.
Located in the heart of Manhattan’s Upper East Side , the space is more than 36,000 square feet and includes 367 feet of continuous, wrap-around frontage. Situated between 61st and 62nd streets, the complex takes up the full west side of the Madison Avenue block, with large portions of the cross-streets between Madison and Fifth avenues. It’s ideally sandwiched between Barneys New York and Hermès.
The retail space is vacant now and being renovated for delivery to retailers in the fourth quarter of 2013. Madison Avenue has seen the highs the lows that many other shopping areas have experienced in recent year. Prior to the recession, the boulevard’s stretch of 57th to 72nd streets thrived, with rents soaring to as high as $1,500 per square foot, brokers told the WSJ. However, a great deal of that prosperity stemmed from ultra-luxury niche products, especially high-end watch stores, which tanked when the economy crashed.
Rents then dropped precipitously to about $500-per-square-foot, and Madison Ave. became host to over two dozen vacancies. However, the area’s continued commitment to luxury bodes well for its stability, brokers assert.
“The luxury market through thick and thin always maintains,” Jeffrey Roseman, EVP and principal at Newmark Grubb Knight Frank, told the WSJ. “When people are losing money, it’s not the ultrarich.”
In fact, rents on the street seem back to prerecession levels. Sitt says he plans to ask about $1,800-per square foot for the space—a spike from the $1,500-per square foot the space was commanding a year ago.
Average asking rents on Madison Avenue have gone up nearly 30% in the past year to more than $1,100 a square foot in the third quarter of 2012, according to Cushman & Wakefield. Some observers caution that Madison Avenue’s rebirth could be shaky, given reduced Wall Street bonuses, uncertainty in Europe and the possibility that taxes on the wealthy will rise this year.
But Sitt is optimistic about the space’s potential. “Madison Avenue is so closely identified with luxury and class that the name itself has become synonymous with high-end, so much so that it is essential for any retailer calling itself a ‘luxury brand’ to have a presence on this thoroughfare,” he says in the release. “The opportunity to market this remarkable space to the best-of-the-best of luxury retail brands was simply too incredible a possibility to pass up.”
Neighboring retailers represent the most upscale of household names in fashion and luxury goods, including Gucci, Jimmy Choo, David Yurman, Dolce & Gabanna, Longchamp, Chanel, Valentino and Michael Kors, in addition to Barneys and Hermes.
The purchase comes just a few weeks after Thor announced it bought 529 Broadway in SoHo, on the corner of Spring Street. That property was acquired for $150 million in a joint deal between Thor, Jeff Sutton, the Adjmi family and Aurora Capital, according to earlier reports in the New York Post. The group made the acquisition during an off-market bidding war.
Plans for the 22,500-square-foot downtown building include a complete teardown. The existing structure will be replaced by a jewel-box flagship, designed by BKSK Architects, spanning 40,000 to 50,000 square feet, the Post states.