Gucci's owners purchased a prime Fifth Avenue retail property on Monday for a whopping $963 million. This could mean an exit from its flagship store for rival fashion house Armani.
Gucci's parent company, Kering, is building a 115,000-square-foot, three-story retail space at 715-717 Fifth Avenue at East 56th Street, at the base of a 28-story office tower known as the Corning Glass Building. I got the scoop.
Recent condominium retail sales are significant on many levels.
This marks seller Geoff Sutton's third spectacular coup on the famous shopping street in less than a month. Prominent retail developer and landlord Wharton Properties sold both 720 Fifth Ave. and 724 Fifth Ave. to Prada last month for a total of $835 million, making it the city's largest investment in 2023. The transaction included a sale.
Gucci's owner said the purchase of the Corning Glass Building “represents a further step in Kering's selective real estate strategy aimed at securing highly desirable and key locations for its corporate homes.”
It also reflects the soaring wealth of the “World's Greatest Shopping District,” with Kering's purchase joining the likes of Prada, LVMH, Rolex and Harry Winston, as major retailers own Midtown Fifth Avenue real estate. The trend of purchasing for internal use is accelerating.
“It's important to note that most of the buyers are foreign companies,” said Joanne Podel, a retail power broker at Cushman & Wakefield. “Perhaps it's because in Europe we buy long-term interests in commercial properties. We don't have to worry about lease expirations. Of course, there's an inherent benefit to shopping in the world's most important retail destination. It has great value.”
It's unclear how the sale will affect the building's current tenants, the Armani boutique and restaurant at 717 Fifth, or Gucci's current flagship in Trump Tower across the street.
Another fashion rival, Dolce & Gabbana, also has a large store here. In addition to Gucci, Kering's line also includes Saint Laurent, Balenciaga, and Alexander McQueen.
Armani's lease at 717 Fifth, signed in 2007, is set to expire in the next few months, according to sources. The famous fashion house will soon open a new store and restaurant at 760 Madison Avenue. There, it is partnering with SL Green in a Giorgio Armani-branded condominium tower.
SL Green was a minority partner in the Fifth Avenue commercial property. Harrison Sitmar, Chief Investment Officer at SLG, said: “This disposition represents another successful investment in our partnership with Jeff Sutton. This transaction highlights how well-located assets continue to generate global investor demand across cycles. This is another example of this.”
