The Real Deal New York

Manhattan retail landlords now offering big tenant giveaways to avoid cutting rents

SL Green, Jeff Sutton, for instance, offered to take over Nike's Trump Tower lease to get $700M deal at 650 Fifth done
March 28, 2017 09:06AM

Current retail space at 650 Fifth Avenue

Facing rising retail vacancies, Manhattan landlords are offering perks like paying for renovations and moving expenses to lure tenants.

Instead of slashing asking rents, landlords are finding other ways to sweeten retail deals, Bloomberg reported. For example, SL Green Realty and Jeff Sutton offered to takeover Nike’s lease at Trump Tower to make way for its $700 million deal at 650 Fifth Avenue.

“That deal did not come easy by any stretch,” Andrew Mathias, president of SL Green, said of the Nike deal during an investor conference.

And Thor Equities TRData LogoTINY, which has a number of vacancies across its retail portfolio, gave fashion designer Tom Ford a $12 million “improvement allowance” when he signed a 12,300-square-foot lease at 650 Madison Avenue.

Rents have been on the rise, especially on Fifth Avenue between 49th and 60th streets, where they jumped 50 percent in the past five years, according to Cushman & Wakefield. The availability rate along Fifth Avenue — the most expensive stretch of retail real estate in the world — jumped to 15.9 percent in the fourth quarter of 2016, rising from 10.1 percent the previous year. In the third quarter, average asking rent swelled to $3,213 per square foot and then dropped at the end of the year to $2,985. [Bloomberg] Kathryn Brenzel