Michael Shvo is set to acquire the office portion of General Growth Properties and Thor Equities’ 685 Fifth Avenue office and retail building in Midtown, The Real Deal has learned.
Shvo is in contract to buy the non-retail portion of the 20-story, roughly 115,000-square-foot building, which is located on the corner of 54th Street in the heart of the Upper Fifth Avenue retail corridor.
GGP, led by Sandeep Mathrani, and Thor, led by Joseph Sitt, partnered to acquire the entire property from Italian luxury brand Gucci for $460 million last June. Both Shvo and sources at GGP and Thor confirmed the transaction.
“We can confirm that we are in contract on 685 Fifth Avenue,” Shvo said in a statement. “This is an exciting project and a great addition to our growing portfolio.”
The deal is expected to close by the end of this year.
Shvo is paying around $1,225 per square foot, according to sources with knowledge of the deal. With around 90,000 square feet of office space at 685 Fifth Avenue, the deal would be valued at more than $110 million, and insiders confirmed the transaction is worth north of $100 million.
It is the second time in less than a year that Shvo has moved to acquire the non-retail portion of one of GGP’s Upper Fifth Avenue retail corridor assets.
In April, Shvo and Russian developer Vladislav Doronin’s Amanresorts teamed to buy the office portion of the nearby Crown Building at 730 Fifth Avenue for $475 million, with plans to convert the commercial space into luxury apartments. That deal closed concurrently with Jeff Sutton and GGP’s acquisition of the entire Crown Building from Spitzer Enterprises for nearly $1.8 billion.
As with the Crown Building acquisition, Shvo is expected to pursue yet another luxury residential conversion at 685 Fifth, though a spokesperson for the developer declined to comment on plans for the property.
GGP and Thor are retaining the building’s 25,000-square-foot retail component, which most recently housed denim brand Diesel. The space is currently the last retail vacancy on Fifth Avenue between 51st and 57th streets, Mathrani said in the company’s third quarter earnings call this month — though the landlords are “trading paper” with potential tenants for the location.
The sale is also the third time this year that GGP has offloaded the office portion of one of its prized Manhattan retail properties to investors. In addition to the Crown Building deal with Shvo and Amanresorts, the REIT also sold five stories and 80,000 square feet of office space at 200 Lafayette Street in Soho to LaSalle Investment Management for $125 million earlier this year.
GGP and Sutton recently secured luxury retailer Bulgari to a new 15-year lease at the Crown Building’s retail space for rents in excess of $5,000 per square foot – a new city record, as The Real Deal reported.
Katherine Clarke and Adam Pincus contributed reporting.