The flags of 747 Madison Avenue are changing as one international luxury brand is replacing another at the Wharton Properties building.
Italian fashion house Versace is replacing French luxury label Givenchy at Jeff Sutton’s property, according to documents filed with the Tel Aviv Stock Exchange reported by the Commercial Observer. Wharton is asking Givenchy to leave by March 8 after an agreement allowed either side to terminate the lease as early as next month.
Givenchy in 2013 took space at the property’s base, which was formerly occupied by Valentino. The retailer agreed to a 15-year lease near a reported $1,700 per square foot, set to stay in the space until 2029.
But Wharton ultimately decided to nearly cut the lease duration nearly in half. Givenchy was paying close to $5 million per year, according to the Observer, and parent company LVMH paid $24.5 million to leave its lease early.
Versace is getting a significant discount for its seven-year lease at the property. The company is starting at $1.6 million per year, which will increase by about 3 percent annually for the duration of the lease. The Observer reported the company is also getting three months of free rent to start.
The lease at the corner of East 65th Street includes 2,800 square feet on the ground floor, a 1,000-square-foot mezzanine and a 1,500-square-foot basement. The space adds to Versace’s presence in the city, where it has a flagship at Crown Acquisitions’ 647 Fifth Avenue.
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CBRE’s Richard Hodos and Michael Remer represented Versace in the lease, which requires approval from the building’s co-op board. Alexander McQueen also has a retail location in the building.
In 2019, Sutton refinanced the retail space at the Madison Avenue property for an additional three years, securing a $90 million refinancing package from JPMorgan Chase. The debt replaced a previous loan from Goldman Sachs for the same amount provided in 2014.
Sutton, along with partners SL Green and Harel Insurance, bought the ground-floor retail space for more than $66 million in 2011, before picking up a second-floor duplex for $2.6 million the following year and merging them for a high-ceilinged storefront. In 2013, Sutton bought out SL Green and Harel’s respective one-third stakes in a deal valuing the property at about $160 million.
[CO] — Holden Walter-Warner