The Real Deal New York

Facing rent markup, will Barneys stay at 660 Madison Avenue?

Luxury retailer's rent to triple to $60M by 2019: report
July 11, 2016 08:30AM

660 Madison Avenue and Richard Perry (inset)

660 Madison Avenue and Richard Perry (inset)

Barneys New York is facing a big rent markup at its flagship store at 660 Madison Avenue — to the tune of an extra $40 million by 2019 — tossing the future of the luxury retailer’s location up in the air.

The store — along with Barneys on Wilshire Boulevard in Beverly Hills — could see rents triple in three years when the lease renewal options comes due, making it difficult for majority owner Richard Perry to sell a stake in the company as he’s been trying to do, the New York Post reported.

Together, the two locations account for about $400 million, or roughly two-thirds, of the company’s revenue. The Madison Avenue store’s rent could skyrocket to $60 million from $20 million, based on $1,500-per-square-foot rents in the neighborhood, sources said. The Beverly Hills store’s rent could jump to $14.5 million from $5 million, the Post reported.

“This is a ticking time bomb for Barneys” and could scare off investors, a former executive said.

Late last year, the Safra family filed plans to add apartments and hotel rooms to the top of the 475,000-square-foot property at 660 Madison, which houses Barneys on the lower floors and office condominiums on the 10th through 23rd floors. The Brazilian banking dynasty paid $285 million for the 200,000-square-foot office property in 2010. Ashkenazy Acquisition has owned the 275,000-square-foot retail condo since 2001.

Barneys signed a 71,000-square-foot lease renewal and expansion at its corporate headquarters at 575 Fifth Avenue last December, as TRD reported. The length of the lease was not disclosed. Last year, Barneys moved its visual department to a 10,000-square-foot manufacturing and office space in Long Island City. [NYP] — E.B. Solomont