The retail market had a tough year in 2017.
Case in point: The year’s priciest lease, Hyundai/Genesis’ $11 million deal in the Meatpacking District, was less than one-third as valuable as the most expensive deal from 2016.
In 2017, there were no blockbuster deals on the expensive stretch of Fifth Avenue on par with Nike’s $35 million deal last year at 650 Fifth Avenue — or the Swatch Group’s $35 million lease at the St. Regis hotel the year before.
Instead, 2017 saw just a small handful of deals crack the $10 million mark, with Sephora and Levi’s inking leases in Times Square. The overheated retail market, the Amazon effect and a wave of retail bankruptcies certainly had an impact on sentiment this year.
But there are indications that there could be brighter days in 2018, as retail experts say they’ve seen an uptick in activity toward the end of the year as rents have corrected to levels where tenants are starting to return to the market.
For 2017, The Real Deal ranked the most valuable retail leases of the year, according to several interviews with sources familiar with lease values. The ranking is based on the first year’s approximate rent payment. For each deal, TRD reached out to the tenant, landlord or brokerage. Most did not respond to a request for comment.
40 10th Avenue
Genesis, the high-end luxury brand from South Korean automaker Hyundai, inked 2017’s priciest lease late in the year when it signed on for roughly 40,000 square feet at the base of Aurora Capital Associates and William Gottlieb Real Estate’s Meatpacking District development at 40 10th Avenue, also known as the Solar Carve.
2) Sephora (tie)
$10 million to $11 million
Sephora took roughly 6,000 square feet on the ground floor and another 12,000 square feet on the lower level at the base of the Marriott Marquis hotel. Vornado is repositioning the 45,000 square feet of retail it controls at the base of the building through a 20-year lease it signed in 2012 with Maryland-based Host Hotels & Resorts for $213.2 million.
Sephora will relocate from Tamares Group’s 1500 Broadway.
2) Levi’s (tie)
$10 million to $11 million
In another big Times Square coup for Vornado’s 1535 Broadway, all-American denim brand Levi’s stitched up a 17,250-square-foot lease at the building.
4) Palace Entertainment
11 Times Square
As landlords turn to experiential retail to insulate themselves from e-commerce, SJP Properties inked a 45,000-square-foot deal at 11|X – formerly known as 11 Times Square – to the Madrid-based entertainment center developer Parques Reunidos.
The developer plans to build a Lionsgate Entertainment-themed entertainment center with 13 attractions.
See more 2017 year end reviews here
5) Line Friends
The South Korean offshoot of the popular messaging app LINE signed a 10-year, 4,629-square-foot lease with SL Green Realty. The deal came with 65 feet of wraparound frontage and rights to a 1,314-square-foot LED sign.
6) FAO Schwarz
30 Rockefeller Plaza
The storied toy shop is returning with a 19,000-square-foot deal at Rockefeller Center.
The space will be much smaller than the 61,000 square feet that FAO Schwarz occupied at the base of the General Motors Building, where it closed up shop in 2015 after 30 years in business, citing high rents.
FAO Schwarz’s new store will replace the NBC Experience Store.
7) Nordstrom Rack
855 Sixth Avenue
8) Old Navy
147 East 86th Street
The subsidiary of Gap Inc. signed a 15-year, 18,500-square-foot lease at the base of Ceruzzi Properties and Kuafu Properties’ 18-story condominium project on the Upper East Side.
The deal covers 5,600 square feet on the ground floor of the $415 million development at 147 East 86th Street.
112 West 34th Street
The discount department store signed a lease for a 43,000-square-foot store at Empire State Realty Trust’s 112 West 34th Street.Target Will Have An Entrance On 34th Street across from Macy’s, As Well As An Entrance On 33rd Street.
CVS signed a lease for 17,500 square feet at the Brill Building early in the year after talks with Jimmy Buffett for his Margaritaville restaurant fell apart. A Margaritaville restaurant and hotel is reportedly in the works at 560 Seventh Avenue.
|Most valuable Manhattan retail leases of 2017|
|Rank||Address||Estimated annual rent||Tenant||Tenant agent||Sq. ft.||Landlord||Landlord agent|
|1||Solar Carve Tower, 40 Tenth Avenue, Meatpacking District||$11 million||Hyundai's Genesis||Nassimi Group's Richard Nassimi and Michael Lohan||40,000||Aurora Capital Associates, William Gottlieb Real Estate||Aurora Capital Associates|
|2||1535 Broadway, Times Square||$10 million to $11 million||Sephora||Crown Retail Services' Virginia Pitarelli||18,000||Vornado Realty Trust|
|3||1535 Broadway, Times Square||$10 million to $11 million||Levi's||Cushman & Wakefield's Laura Pomerantz||17,250||Vornado Realty Trust|
|4||11|X at 11 Times Square, Times Square||$7.9 million||Palace Entertainment||RKF's Robert Futterman, Joshua Strauss and Scott Zinovoy||45,000||SJP Properties||RKF's Robert Futterman, Joshua Strauss, Scott Zinovoy|
|5||1515 Broadway, Times Square||$6 million||Line Friends||Cushman & Wakefield's Steven Soutendijk, Glenn Yang and Molly Sandza||4,629||SL Green Realty||RKF's Ariel Schuster,
Jordyn Comras and
|6||30 Rockefeller Plaza, Midtown||$6 million||FAO Schwarz||Cushman & Wakefield's Kenji Ota||19,000||Tishman Speyer|
|7||855 Sixth Avenue, Penn Plaza||$5.8 million||Nordstrom Rack||Crown Retail Services, Stephen Stephanou and Thibaud Veil||46,500||Durst Organization||Durst Organization's Eric Engelhardt, Rocco Romeo, Lindsey Ravesloot and Meghan Duffany; RKF's Ross Berkowitz, Robert Futterman and Peter Whitenack|
|8||147 East 86th Street, Upper East Side||$4.5 million||Old Navy||RKF's Ariel Schuster and Justin Fantasoa||18,500||Ceruzzi Properties|Kuafu Properties||Ripco Real Estate's Andrew Mandell|
|9||112 West 34th Street, Penn Plaza||$4.3 million||Target||Ripco Real Estate's Peter Ripka, Richard Skulnik and Jeffrey Howard||43,000||Empire State Realty Trust||ESRT's Fred Posniak and Shanae Ursini; Cushman & Wakefield's Joanne Podell, Ian Lerner and Mary Clayton|
|10||Brill Building, 1619 Broadway, Midtown||$4 million||CVS||Newmark Knight Frank's Jason Pruger, Harrison Abramowitz and Ross Kaplan||17,500||Brookfield Property Partners||Keller Williams' Julia Maksimova|
|Source: The Real Deal's Deal Sheet and industry sources. All deals were vetted with brokerages and landlords. Most declined to comment.|