New York City luxury retail property mogul Jeff Sutton is selling some of his trophy properties on Fifth Avenue to global luxury conglomerates that have cash and are looking to use it to control the destinies of their brands.
Gucci parent Kering acquired a 115,000-square-foot, multilevel retail space at Fifth Avenue and 56th Street from Sutton and SL Green Realty Corp. for $963 million this week. And last month, Italian luxury group Prada paid Sutton a combined $835 million for 724 Fifth Ave., where it has leased a store since 1997, and the neighboring 720 Fifth Ave., currently home to an Abercrombie & Fitch store.
Kering — which also owns such upscale brands as Saint Laurent, Bottega Veneta, Balenciaga and Alexander McQueen — has not announced which brand or brands will take over the space it has purchased. Privately owned luxury labels Dolce & Gabbana and Giorgio Armani will vacate soon. Armani operates a boutique at 760 Madison Avenue.
Driven by aggressive store expansion, luxury retailers enjoyed remarkable revenue gains in 2023. The U.S. remained the largest luxury market globally last year, accounting for an estimated 32% of global luxury sales, according to a September report from JLL. And prime urban retail corridors like Fifth Avenue are benefiting from the gradual return of tourists and hybrid office workers. Foot traffic on Fifth Avenue climbed by 17% in 2023, according to JLL’s City Retail 2024 report.
Despite the high price of purchasing prime property, luxury conglomerates might be better off owning than renting. Fifth Avenue retained its ranking as the world’s most expensive retail destination with annual average rent of $2,000 per square foot in 2023, which is unchanged from last year, according to Cushman & Wakefield’s annual Main Streets Across the World tally.
Source: https://www.icsc.com