Gulaylar in contract for 685 Fifth’s offices after Shvo deal falls through

Turkish firm plans to develop five-story addition

Rendering of 685 Fifth Avenue (credit: Marin Architects via 6sqft) (inset: Michael Shvo and Gulaylar Group's Mehmet Gulay)
Rendering of 685 Fifth Avenue (credit: Marin Architects via 6sqft) (inset: Michael Shvo and Gulaylar Group's Mehmet Gulay)

The New York property development arm of Turkish jewelry company the Gulaylar Group entered contract to acquire the 90,000-square-foot office component at General Growth Properties and Thor Equities’ 685 Fifth Avenue in Midtown, sources told The Real Deal. Developer Michael Shvo, who had signed a contract in November, has since backed out, sources said.

As part of the deal, the Gulaylar Group will develop the five extra floors of office space planned for the 20-story, 115,000-square-foot property, near East 54th Street. The expansion is expected to raise the building’s height to 292 feet from 227 feet.

Gulaylar affiliate City’s Property Development New York signed a contract in March and is expected to close on the deal later this year, sources said.

The price was not immediately clear, but sources said Shvo was set to pay north of $110 million, or $1,225 per square foot.

Sources familiar with the deal said Shvo could still be involved in the deal if Gulaylar were not to close.

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Representatives for GGP and Shvo could not be immediately reached for comment, while Thor declined to comment.

GGP and Thor acquired the building in full for $460 million from Gucci in 2014.

In February, luxury handbag retailer Coach signed a lease to anchor the property with a 23,400-square-foot global flagship store known as the “Coach House.” The retail asking rent was about $4,000 per square foot.

The Gulaylar Group is best known in New York real estate for having acquired the three-floor, 12,000-square-foot retail condominium unit at Extell Development’s International Gem Tower at 50 West 47th Street in 2013 and developed the IGT Jewelry Mall that opened the following year.

Last year, Shvo and Russian developer Vladislav Doronin’s Amanresorts closed on the purchase of the office portion of the Crown Building at 730 Fifth Avenue for $475 million, with plans to convert the commercial space into luxury apartments.