Valentino to pay $16M rent for Thor space: Sources

CEO Joseph Sitt had boasted he would get $2,000 per square foot at 693 Fifth Avenue — and he beat his own target
By Adam Pincus | May 09, 2013 08:30AM

Skeptics within Manhattan’s retail industry wondered if Thor Equities would achieve its aggressive asking rent at the Takashimaya Building, the 20-story commercial tower at 693 Fifth Avenue, which it acquired in 2010 for $142 million.

Two years ago, company CEO Joseph Sitt boasted that he would get at least $2,000 per square foot on the ground floor of the tower, located between 54th and 55th streets, in the heart of the city’s priciest retail district. At the time, even asking rents had barely broken that number.

But after patiently holding his ground, this week, word broke that he beat that target handily. He snagged fashion designer Valentino as a tenant covering 20,000 square feet in the ground, first and second floors, as well as the basement, as Women’s Wear Daily first reported.

Thor achieved a record ground floor rent for a multi-level store in the city, although the exact price per foot is difficult to ascertain.

Some real estate insiders, who asked to remain anonymous, considered the ground floor rent a breakthrough, believing it was the first in the city to hit $3,000 per foot. Others pegged it closer to about $2,600 per foot. While not as high, that’s still a record for the city in a store with levels above the ground floor.

The discrepancy had to do with the layout of the ground floor. Although the floor was described in marketing materials as being about 5,400 square feet, a portion of that was composed of the lobby, yielding about 4,400 square feet of usable space, insiders said.

Calculating the ground floor rent using the 5,400 square foot measurement yields the $2,600 per foot figure, but calculating the rent using the smaller 4,400 square foot number brings the rent to $3,000 per foot.

The Highest Rent On The Ground Floor Along Fifth Avenue is cosmetics firm MAC, which inked a deal at Vornado Realty Trust’s 689 Fifth Avenue, next door, for $2,700 per square foot.

Thor has been on a rush to buy and develop along Fifth Avenue in recent years, focusing south of 49th Street. For example, he is redeveloping 520 Fifth Avenue, between 43rd and 44th streets.

But Thor has properties all over the city. The company recently purchased retail space at 680 Madison Avenue, between 61st and 62nd streets, for $277 million, and is redeveloping that too. And in the Meatpacking District, Sitt is betting big in a deal with Taconic Investment Partners to redevelop a low-rise building at 837 Washington Street into a six-story office and retail asset.

For a while, the prospects did not look good for the Takashimaya retail. To lure tenants, one year ago, Thor launched a $5 million upgrade to the space.

Earlier this year, brokers said he was asking $18.5 million for seven floors, from the lower level through the sixth floor.

Retailers such as Cartier, Max Mara and Ralph Lauren took a look at the space, sources said.

Valentino did not immediately respond to a request for comment. Thor declined to comment.