Best Buy signs lease for new store at 535 Fifth
Retailer will move across the street from its current location at Silverstein’s 529 Fifth Avenue
Best Buy’s Fifth Avenue flagship store is moving — but not very far.
The consumer electronics retailer has signed a 10-year lease for 40,839 square feet at 535 Fifth Avenue, landlord the Moinian Group disclosed Sunday in a filing on the Tel Aviv Stock Exchange. The lease will span the first, second, mezzanine and basement levels of the property and comes with two five-year extension options.
The new store is located across 44th Street from the existing Best Buy store at Silverstein Properties’ 529 Fifth Avenue.
A Best Buy spokesperson confirmed in an email that the retailer would not be renewing its lease at 529 Fifth. “Depending on permitting and construction schedules, we hope to be serving customers in the new location in late 2020 or early 2021,” the representative said.
“We have had a terrific relationship with Best Buy over the past 13 years,” Silverstein executive vice president and director of leasing Jeremy Moss said in a statement. “This is a great retail location, and we are happy that they are staying in the neighborhood. Their move creates an excellent opportunity for us to completely upgrade our Fifth Avenue storefront and create a flagship opportunity for a first-class retail tenant in the building.”
Moinian did not respond to a request for comment. Peter Ripka of RIPCO represented Best Buy in the transaction.
According to its own disclosures to the Tel Aviv Stock Exchange, Silverstein recently “recorded a fair value adjustment that lowered the investment property value of 529 Fifth Avenue by $35 million,” which it attributed to “the retail slowdown on 5th Avenue corridor.” The 20-story office building has about 28,840 square feet of retail space, primarily occupied by Best Buy.
Best Buy’s annual rent at 535 Fifth Avenue will total $8.25 million during the initial term of the lease, increasing to $10.45 million if the first extension option is exercised and to $11.495 million for the second extension, Moinian’s disclosure states. These totals work out to $202, $256 and $281 per square foot, respectively — remarkably low numbers for Fifth Avenue retail.
According to the latest Manhattan Retail Report from the Real Estate Board of New York, average asking rents for ground floor retail on Lower Fifth Avenue (between 42nd and 49th streets) fell by 9 percent year-over-year to $852 per square foot this fall.
Despite accounting for about half of the total retail space at 535-545 Fifth Avenue, the disclosure notes that Best Buy’s lease will account for just “more than 20 percent” of the property’s income.
The landlord is also set to pay Best Buy $7.5 million for tenant improvements upon the opening of the flagship, and will face an annual interest rate of 9 percent on that sum if it is not paid on time.
Moinian picked up the adjacent prewar buildings at 535 and 545 Fifth Avenue, along with a third building at 509 Fifth Avenue, in a $270 million portfolio deal in 2006.
In 2012, the firm tapped Winick Realty Group to market the combined retail space at 535 and 545 — with backup plans to split up the space again if a tenant for the full 84,000 square feet could not be found, which turned out to be the case. The NBA signed a lease at 545 Fifth Avenue for a 24,000-square foot flagship store in late 2014.
Eddie Small contributed to this article.