Jared Kushner at 666 Fifth Avenue

Despite a recent wave of high-priced, high-profile retail deals, Jared Kushner’s 666 Fifth Avenue is proving no different than many other over-leveraged Manhattan buildings purchased at the height of the real estate market: it’s now running low on cash. According to the Wall Street Journal, Kushner, who led his family’s record $1.8 billion purchase of the office and retail tower in early 2007, is negotiating with lenders to recapitalize the property in exchange for a modification of its $1.22 billion mortgage. The building is now around $3.5 million-per-month short on its debt service payments, and its reserve fund has dwindled to just $10 million, sources said. Comments

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Swiss watch retailer Swatch signed a 15-year lease today valued at $80 million for the
remaining 2,000-square-foot ground-floor retail space in the commercial condominium
at 666 Fifth Avenue owned by a joint venture of the Carlyle Group, Kushner Companies
and Crown Acquisitions, sources close to the deal said.
The rent for the space with a 20-foot wide frontage squeezed between Hollister and
Uniqlo, was approximately $2,000 per square foot, the source said. Bradley Mendelson, a
top retail broker at Cushman & Wakefield, represented the landlord. [more]

In one of the city’s largest-ever retail condominium deals, Spain’s Inditex Group has agreed to pay $324 million to purchase 32,000 square feet at 666 Fifth Avenue for a new flagship Zara store, the company announced today. The space, formerly an NBA store, is roughly one-third of the 90,000 square feet purchased by Stanley Chera’s Crown Acquisitions, the Carlyle Group and Kushner Companies for $525 million in 2008, according to the Wall Street Journal, which originally broke the news of the deal. The rest, which is currently leased by Uniqlo and Hollister, is also on the market. The purchase price for the Zara space includes the buyout of the remaining time on the NBA’s lease, which sources said had less than three years before its expiration. Uniqlo’s lease at 666 Fifth last year, in which it agreed to pay $300 million over 15 years, was among the city’s most expensive retail leases ever. [WSJ]

The Hollister store at 666 Fifth Avenue

The new Hollister flagship at 666 Fifth Avenue efficiently explodes the notion that a clothing store is mainly about the items for sale on its shelves. Obviously the purveying of apparel, for decades now, has consisted of the sale of such imponderable commodities as zazz and mystique. But no previous shop has gone quite as far as in that direction as Hollister on Fifth Avenue located between 52nd and 53rd streets, the Southern California lifestyle clothing brand’s second flagship to open in the city, several years after the first one at 600 Broadway. The new store shows absolutely no interest in or respect for the structure that contains it, formerly owned by Tishman Speyer Properties and designed by Carson & Lundin (which later became Carson Lundin & Shaw Architects) in 1957 with a distinctive metal facade. [more]

Brokers anticipate a rise in foreign companies opening their first retail stores in New York City in 2011, increasing from the approximately dozen that debuted this year.

“I would say there are 20 to 30 brands that are actively looking and will potentially open next year,” Robin Abrams, executive vice president at commercial brokerage firm Lansco, said. She spoke about the trend of foreign retailers opening new stores in the accompanying video segment Insights from The Real Deal (see video above).

Brokers mentioned several retailers that were looking in New York, although most of them could not be confirmed. Possible new stores for New York City include Pull & Bear and Massimo Dutti, both owned by the world’s largest retailer, Spain-based Inditex, which also owns Zara; British apparel firm Jack Wills; and French clothing maker Vanessa Bruno. Abrams said Swedish clothing store Polarn O. Pyret, which opened this fall in Greenwich, Conn., has been looking in New York City as well.

Beth Rosen, a senior director at retail brokerage Robert K. Futterman & Associates, said she recently returned from a trip to Italy to look for new stores that could be interested in opening in New York.

In addition, she met in New York with a shoe retailer based in Russia that has about 50 stores in that country and in Italy, but no American presence. The company hopes to open 100 stores in the United States over the next five or 10 years, but she would not disclose the company’s name.

And her firm is also looking toward Asian retailers as well.

“Our office is definitely targeting and calling these Chinese retailers and Japanese retailers to look for the next Uniqlo,” she said, referring to the brand opened by Japan’s largest clothing retailer Fast Retailing, which signed a blockbuster nearly $300 million lease at 666 Fifth Avenue this year. She said her firm is looking to other booming markets as well.

“Brazil is huge. Everyone is looking to Brazil for new retailers,” Rosen said.

Retail leasing agents said they no longer depended so heavily on Western European countries such as France and Italy to be the sources for new stores in New York.

“Australia is starting to look like a good training ground now,” Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman, said, with companies such as clothing chain Cotton On, based there, considering a move here.

Some brokers want to encourage manufacturers or wholesalers to break into retail game in New York.

Michael Glanzberg, a principal at Sinvin Real Estate, said his office is representing about a half-dozen Chinese designers and manufacturers who are considering opening stores in North America, including New York.

“They feel they can skip the middleman and market themselves,” he said.
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Stanley Chera and 666 Fifth Avenue

Stanley Chera’s retail-focused Crown Acquisitions could gain a stake in the new owner of bankrupt retailer Urban Br [more]

Could Uniqlo be moving in at 31 West 34th Street?

Just four months after signing one of Manhattan’s most valuable retail deals ever, Japan-based apparel chain Uniqlo is in discussions to lease two or more floors at 31 West 34th Street, one block from Macy’s, according to two sources [more]

Manhattan-based Kushner Companies is looking to buy AIG’s equity stake in a 17,000-apartment portfolio, according to Bloomberg news, as the insurance giant faces mounting pressure to pay back its $182.3 billion government bailout. Kushner had sold off the collection of apartments in 2007 for $1.9 billion, in what Jared Kushner, son of company founder Charles Kushner and a principal with the firm, described as a “strategic shift” away from suburban property ownership. The sale came on the heels of Kushner Companies’ purchase of 666 Fifth Avenue for $1.8 billion — which, at the time, was the most ever paid for a single building in the country. Kushner has offered between $165 million and $190 million for the equity interest, according to sources close to the deal. The portfolio of properties includes mostly middle-income, suburban apartment buildings in Pennsylvania and New Jersey. [Bloomberg]

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Jones Lang LaSalle has poached the star Cushman & Wakefield sales team that has brokered $20 billion worth of deals over the past decade, including the sale of 666 Fifth Avenue and the Plaza Hotel, according to Crain’s. The foursome — Richard Baxter, Jon Caplan, Ron Cohen and Scott Latham — will lead JLL’s New York City capital markets team as part of the firm’s recent efforts to build up its talent and services. [more]

Experts say that 666 Fifth Avenue’s record-breaking retail lease signing last week is a sign of market recovery, according to the Wall Street Journal. Japanese retailer Uniqlo nabbed 89,000 square feet of space in the building, owned by the Kushner Companies, Crown Acquisitions and the Carlyle Group, for a record $300 million over 15 years. The retail space at the Midtown skyscraper is fetching an average rent of $2,500 per square foot, trumping the rents seen at several noted shopping neighborhoods worldwide, including the Champs-Elysees in Paris and the Causeway Bay in Hong Kong. [more]