Harry Macklowe famously transformed Fifth Avenue retail when he brought the Apple cube to the base of the General Motors Building in 2006. Now, 10 years later, the GM Building’s neighbors have a similar idea, but this time they’re thinking in two dimensions.
Property owners on East 59th Street are repositioning retail spaces looking out onto the GM Plaza in the hopes of creating a shopping “square” that piggybacks on the recent Cartier and Under Armour deals, anchoring the north end of the plaza the way that Bergdorf Goodman does on the southern end.
And early signs indicate the changes will pay off.
Techies have lined up outside Snapchat’s pop-up shop at 5 East 59th Street ever since it opened in late November in the building that once served as home to the Playboy Club, which owners GreenOak Real Estate and Capstone Equities overhauled earlier this year.
And now the Sherry Netherland is looking to upgrade a pair of staid retail spaces at the corner of Fifth Avenue. The idea is to draw foot traffic north to a place that’s usually been a shopping dead-end.
“If I were in charge of those properties, I’d be trying to do the same thing: I’d pull Fifth Avenue north,” said CBRE’s Richard Hodos, who noted that despite the success of Apple’s store, retail in the immediate vicinity has been pretty humdrum.
The CBS studio that used to sit at the northern end of the GM Building was a popular destination during tapings of “The Early Show,” but failed to draw major foot traffic throughout the rest of the day. And FAO Schwarz, while undeniably iconic, had an appeal that was limited to a few months each year during the holiday season.
But that all changed when Boston Properties, which bought the GM Building from Macklowe in 2008, let CBS walk away from its lease four years later and brought Cartier into that space in 2014. (The high-end jeweler had originally planned to take the location on a temporary basis, but wound up making the store a permanent fixture.)
And earlier this year athletic-apparel retailer Under Armour surprised the industry when it outmaneuvered rival Nike to take the former FAO Schwarz space. Observers are waiting patiently to see what kinds of crowds the store draws when it opens next year.
Retail rents on prime Fifth Avenue up to 59th Street averaged just shy of $3,500 per square foot, according to the Real Estate Board of New York’s fall retail report. But there’s a lot of room for variation depending on whether the deal is in a place like the corner of 57th Street, where Bulgari inked a record $5,000 per-square-foot deal in 2015, or at the base of the GM Building, where Boston Properties was asking north of $1,500 per square foot for the Under Armour space. Market pricing for 59th Street may be more in line with spaces on Madison Avenue, where asks are around $2,000 per square foot.
With the plaza going through a change, GreenOak and Capstone decided to revamp 5 East 59th Street, which they purchased last year for $85 million. The partners quickly bought out the Italian restaurant Bottega del Vino and several office tenants above. They’re marketing the property now as a 40,000-square-foot combination space, looking for a single tenant that will sell trendy wares off the ground floor and use the ones above for offices or showroom space once Snapchat’s short-term lease is up.
One of the major selling points is the building’s 5,000-square-foot façade that can be used as an eye-catching sign seen across the plaza.
“I think part of the appeal is that it’s the only unencumbered building you can occupy in this neighborhood and use the façade as frontage,” said Kelly Gedinsky of Winick Realty, which is marketing the space. “It’s visible as far as Park Avenue in the 50s and 7th Avenue.”
The owners are asking $14 million a year in rent.
At the Sherry Netherland, the co-op is looking for new tenants to take the 1,000-plus square-foot space on Fifth Avenue formerly occupied by Italian fashion boutique Domenico Vacca, as well as the antique-jewelry and art gallery A La Vielle Russie’s 6,500-square-foot space at the corner of 59th Street and Fifth, which is becoming available for the first time in 35 years.
RKF’s Rob Cohen, one of the brokers marketing the spaces, said he could see a jewelry shop, a high-end accessories store or even an apparel retailer take the space. But the deal won’t necessarily come down to dollars and cents.
“They’re more concerned about the quality of the tenant than setting any sort of record rent,” he said. “The Sherry Netherland’s a very special property. It anchors one of the plaza’s four corners.”