By Adam Pincus
While many troubled retailers are using Chapter 11 protection to cancel leases, bankrupt retailer Hartmarx was paid $11.8 million by its landlord to terminate a below-market lease at the prime Midtown location of its subsidiary, men’s clothier Hickey Freeman, at 666 Fifth Avenue.
A partnership of Crown Acquisitions, the Carlyle Group and Kushner Companies paid Hartmarx the multi-million dollar fee to terminate the lease at its location in the retail portion at 666 Fifth Avenue, between 52nd and 53rd streets. The office portion of the building is owned by Kushner Companies.
The partnership bought the leasehold June 4, city property records published this week show, months after Hartmarx filed for bankruptcy protection in Illinois in January. The lease was signed in 2000, expired in 2016 and had an option to extend another five years, bankruptcy court records show.
The company was paying about $300,000 per month for its space, bankruptcy papers said. The retail leasing agent for the building, Bradley Mendelson, executive director at Cushman & Wakefield, said the space was 4,200 square feet, which would result in a price per square foot of $857.
Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman, who is not involved at 666 Fifth Avenue, said relatively recent deals mid-block have been made between $1,850 and $2,200 per square foot and the landlord could expect about $2,500 per square foot.
“This is the most well known, best address in the world Fifth Avenue — and commands the highest rent numbers possible,” she wrote in an e-mail.
Henry Goldfarb, vice chairman and retail expert at full service commercial firm Grubb & Ellis New York, was more cautious, noting the general economic weakness.
“Anyone who would pay that kind of money would have to have a tremendous amount of faith and the situation they are entering into has to be picture-perfect,” he said.
Hickey Freeman vacated the prime mid-block location on Fifth Avenue this spring. It was expected to open a new location at 543 Madison Avenue, where signs announcing its impending arrival are now displayed in the windows.
A children’s line of clothier Abercrombie & Fitch is expected to take the space of the former men’s clothing retailer, but a price per square foot was not released.
The landlord partnership reportedly paid $47 million last year to buy out the below market lease Brooks Brothers held at the corner retail location of 666 Fifth Avenue at 53rd Street, next to the former Hickey Freeman space.