The Real Deal New York

Avon looks to sublease 220K sf HQ on Third Avenue

Storied cosmetics company is relocating to UK

August 30, 2016 02:38PM
By Rich Bockmann

777 Third Avenue

The Avon lady in an advertisement and 777 Third Avenue

UPDATED, 10:00 a.m., Sept. 1: Ding dong, Avon calling. Subtenants, that is.

The storied cosmetics company has put its almost 222,000-square-foot headquarters on Third Avenue on the sublease market as the embattled firm prepares to relocate to the United Kingdom.

Avon, founded in Lower Manhattan in the 1880s, has listed the nine-floor space at the base of the William Kaufman Organization’s 777 Third Avenue, according to CoStar.

The lease has 10 years remaining on a 15-year deal the cosmetics company inked back in 2010 at the 39-story, 628,000-square-foot tower between East 48th and 49th streets. Rents for the deal were reportedly set to increase from the low $40s per square foot to the low $50s per square foot.

No asking rent was listed on CoStar, but sources speculated the space could reasonably ask in the $60s per square foot.

A representative for Avon said a new company created to continue the firm’s North American business, New Avon, will “remain headquartered in the New York metropolitan area and is currently exploring specific locations.”

Avon’s struggles have been well documented. The company had a difficult time adapting its direct-sales model as consumers moved toward the internet. Sales have been in decline for more than four years.

In December, the private equity group Cerberus Capital Management TRData LogoTINY struck a deal to buy 80 percent of Avon’s North America business for $605 million. Part the turnaround specialist’s plan for the company involved eliminating some 2,500 jobs and relocating Avon’s headquarters from New York City to the United Kingdom.

Avon said it expected the moves to save $30 million in 2016 and as much as $70 million starting next year, according to paperwork filed with the Securities and Exchange Commission.

A team at Cushman & Wakefield led by Dale Schlather is marketing the Third Avenue space. The broker wasn’t available for comment.

Sources said, though, that Avon completed an extensive build out when it took the space five years ago. According to the listing, the space has glass-fronted offices and can be made available furnished. The floors, which span about 25,000 square feet each, can also be leased individually.

This post was updated to include a statement from Avon.

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