From the December issue: Upper Fifth Avenue (the portion between 49th and 59th streets) is the most expensive retail stretch in the world. However, it’s not the most stable. This past year, the strip saw an unusual amount of activity taking place in its 60-plus spaces, with about a dozen retailers signing leases, opening stores or changing brands.

The half-mile span, where CBRE Group says asking rents average more than $2,400 per square foot, is now jammed with holiday shoppers jostling for gifts.

But behind the scenes, there are other groups jockeying for position: the real estate brokers, dealmakers and analysts who pore over pedestrian counts, comparable leases and store revenue numbers to determine what spaces they or their clients can afford.

This month, The Real Deal looks at the current tenants in the nearly three dozen retail buildings along the stretch, as well as possible new arrivals. We combed through property records and news reports, and interviewed brokers and owners who specialize in Fifth Avenue. [more]

FAO Schwarz exercised its option to extend the lease on its iconic 767 Fifth Avenue location for “fair market value” just three years after preparing to leave, according to Bloomberg News. Boston Properties, which bought the GM Building for a record $2.8 billion in 2008, was so sure FAO Schwarz would vacate its three-flour, 66,465-square-foot retail space when the lease expired in 2012, that the property owner began marketing the property for a new tenant. Now the two parties have entered arbitration over the rent. Shortly after purchasing the 1.77 million-square-foot building, Boston Properties said FAO Schwarz was not the most financially viable tenant considering the under-market rent it currently pays. The stretch of Fifth Avenue between Rockefeller Center and Central Park is the world’s priciest retail real estate. But Toys “R” Us, which owns FAO Schwarz, doesn’t want to endure the difficulty of finding a different Fifth Avenue location and can’t relocate the store to Times Square for fear of competition with its own flagship store. [Bloomberg]

From left: Cynthia Wasserberger, 9 West 57th Street and 767 Fifth Avenue (building photo source: PropertyShark)

[Updated 2:30 p.m., Oct. 11, 2010] Asking rents climbed in a selection of Midtown’s top office buildings over the past six months as the leasing market tightened, with some buildings reaching the $200-per-square-foot level, according to a report [more]

Brazil’s Banco Itau has signed a 15-year lease for 25,000 square feet on the top floor at the General Motors Building, at 767 Fifth Avenue, between 58th and 59th streets. The lease will take up approximately half a floor. With a rate of more than $130 per square foot, the lease marks the city’s most expensive deal of the year, Crain’s reported. The GM tower is one of a scant few in the city that still rakes in more than $100 per square foot. Others include the Lever House at 390 Park Avenue and the Seagram Building at 375 Park Avenue.

The New York Observer looked at how the values of New York City’s 10
priciest office towers have shifted since spring 2007. At that time,
real estate professionals surveyed agreed that the GM Building at 767
Fifth Avenue was worth at least $4 billion. Today, based on its
reported income, the building is worth between $1.9 billion and $2.6
billion. Overall, the value of trophy office buildings, including 9
West 57th Street, Rockefeller Center, 200 Park Avenue and One Bryant
Park, has fallen between 25 and 60 percent. [more]

After rumors that General Motors was looking to relocate from the 100,000 square feet of office space it currently occupies at the GM Building at 767 Fifth Avenue between 58th and 59th streets, Boston Properties, which owns the building, may now be offering GM incentives to stay. GM, which is currently paying $90 per square foot on a long-term lease which expires next spring, may receive six months of free rent if it stays put, among other concessions from Boston. Other locations that were considered when the company went bankrupt last year included office space at the Citigroup Center a few blocks away. [Post]

Even though its lease of 120,000 square feet at 601 Lexington Avenue began June 1, General Motors is in negotiations to renew its lease at Boston Properties’ GM Building instead of moving. The company’s lease for 101,000 square feet at the GM Building, at 767 Fifth Avenue, expires March 31, 2010. Staying at the GM Building would be more cost-effective for General Motors, which could avoid having to renovate the space at 601 Lexington Avenue. Because it is in bankruptcy, General Motors is allowed to reject its leases at any time.