Even though concerns about a double-dip recession are still great, large retail companies continue to pay top prices for premier locations, the Wall Street Journal reported.
Recent examples include clothing company Uniqlo’s $300 million lease on Fifth Avenue, similar to the price Dolce & Gabbana paid to lease space nearby.
“The rent we pay is quite a large amount,” said Shin Odake, COO of Uniqlo USA, of The Store Opening Between 52nd And 53rd Streets On Fifth Avenue in two weeks. “But given that we think we have the best location on Fifth Avenue, and many people walking by will be from across the United States and other countries, we think the rent is actually quite reasonable.”
Rents on the 10 Prime Blocks On Fifth Avenue have risen 50 percent since 2008, even as they have hardly changed in the Flatiron District close by.
“We’re Getting Record Rents On Fifth Avenue,” Michael Fascitelli, president and CEO of Vornado Realty Trust, said at a real estate conference this month. “You’d think you’re in the middle of the most boom year ever. You go to Third Avenue, and you can’t lease the space.” Luxury-goods consumption last year world-wide reached a record at $233 billion in sales, consulting firm Bain & Co. reported. Even some lower-end retailers are becoming interested in such spaces, with the Inditex Group’s Zara soon to occupy 39,000 square feet at 666 Fifth Avenue for $324 million, joining Uniqlo and Hollister.
It is unclear whether the high prices are sustainable given the global financial difficulties. And not all stores are willing to pay high rents. The NBA store on Fifth Avenue decided to look elsewhere when the landlord asked for a five-fold increase in rent. [WSJ]