The Real Deal New York

Owner of 589 Fifth Avenue looks to sell
99-year leasehold

Interest on ground and 184K sf building could be worth up to $400M: report
February 14, 2018 03:45PM

589 Fifth Avenue (Credit: Google Maps)

The owner of the H&M-anchored 589 Fifth Avenue is looking to sell a leasehold interest in the retail-and-office building.

The owner, an entity controlled by London-based Mactaggart Family and Partners, is offering a leasehold interest in the 17-story, 184,000-square-foot building and a 99-year lease on the ground underneath, Real Estate Alert reported. Sources told the publication the property could be worth up to $400 million.

The property’s value is driven by the five-story, 68,000-square-foot retail portion, which is fully leased to H&M on a lease that runs until 2033. The 116,000-square-foot office portion is 92 percent leased.

At the $400 million valuation, the annual yield would pencil out to about 4.5 percent. Cushman & Wakefield has the listing.

Retail asking rents on the stretch of lower Fifth Avenue between 42nd and 49th streets averaged $1,158 per square foot in the fall, down 8 percent from a year earlier, according to the Real Estate Board of New York.

Average Class A office rents in the Fifth Avenue/Madison Avenue submarket are slightly higher than $105 per square foot, which Cushman describes as a “relative value proposition” compared to the Plaza District. [REA] – Rich Bockmann