Nike signs one of NYC’s most expensive retail leases ever at 650 Fifth

Retailer's deal is worth $700M over the lease term

The retail space at 650 Fifth Avenue
The retail space at 650 Fifth Avenue

UPDATED, 5:45 p.m., Nov. 30: In one of the most expensive retail deals ever struck in Manhattan, Nike is taking more than 60,000 square feet at 650 Fifth Avenue. The lease starts at approximately $35 million and is worth a combined $700 million over the term, a source familiar with the transaction told The Real Deal.

The Commercial Observer first reported news of the lease earlier Wednesday. SL Green Realty [TRDataCustom] and Jeff Sutton’s Wharton Properties own the long-term leasehold for the retail portion of the office building, which spans 395,000 square feet. The companies recently added new floors to the retail space and bought Godiva and Devon & Blakely out of their leases in the building, bringing the retail space to well over 60,000 square feet.

The asking rent for the ground floor of the building was $4,000 per square foot, according to CO.

Nike had been looking to get out of its current space at 6 East 57th Street — an eight story building next door to Trump Tower and controlled by Donald Trump— since 2013. It’s not clear, however, if Nike will leave the 57th Street location when its lease expires in 2022, and even then it has options to extend.

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Earlier this year, Nike had negotiated for FAO Schwarz’s former space at the General Motors Building, but competitor Under Armour ultimately scooped up the space.

Cushman & Wakefield’s Joanne Podell represented Nike in the 650 Fifth Avenue deal.

Other blockbuster retail deals include the Swatch Group‘s lease at the St. Regis hotel retail, owned by Vornado Realty Trust and Crown Acquisitions. The annual starting rent on that deal came up to about $35 million. Also last year, Victoria’s Secret signed a deal at Vornado’s 640 Fifth Avenue with an annual starting rent of $34 million. Retail leases at annual rents above $25 million are rare in New York.

Retailers near Trump Tower have lamented recently that ramped up security around the president-elect’s home has hurt sales. [CO] — Kathryn Brenzel and Adam Pincus