Prada has been leasing its flagship store on Fifth Avenue for 25 years, but only recently decided to up the ante by purchasing the entire building.
The Italy-based fashion agreed to purchase 724 Fifth Avenue for $425 million, according to a Hong Kong stock exchange filing reported by Bloomberg.
Jeff Sutton’s Wharton Properties is the seller on the deal, which breaks down to $6,538 per square foot for the 65,000-square-foot property. It’s unclear when the deal may be close.
Sutton did not immediately respond to a request for comment from The Real Deal. Eastdil Secured team led by Will Silverman and Gary Phillips advised Wharton in the deal.
Prada has been locked into a long-term lease at the 12-story property since 1997. The resilience of the American consumer may have pushed Prada into taking a bigger leap at the property, though, which it plans to also use for offices and storage.
Wharton last year landed a $260 million loan from German lender Aareal Capital Corporation to refinance the property. The loan only carried a two-year term, potentially giving Wharton an opportunity to seek fresh debt when interest rates presumably weren’t going to be as high. The loan refinanced $235 million in debt provided by Aareal in 2021.
Sutton acquired the property in 2012 for $223 million in partnership with SL Green Realty and Stonehenge Partners. Sutton bought out SL Green’s interest in 2018.
Fifth Avenue is one of the world’s premier retail corridors and top brands haven’t been afraid of investing in their properties in recent years, despite the pandemic. Large retail renovations, store openings and real estate deals are proliferating on Fifth Avenue, which turned the threat of lockdowns and e-commerce on its head.
Rents on the Fifth Avenue shopping corridor topped $2,000 per square foot at the end of last year and seem poised to grow even higher as 2023 comes to an end, surpassing $2,500 per square foot in some cases.
Japanese coffee company Geshary last week purchased a boutique building at 560 Fifth Avenue for $38 million, or $2,800 per square foot, from the Riese Organization. It was the priciest deal for a full Fifth Avenue retail building since the start of the pandemic, according to Colliers.
This article has been updated to include broker information in the deal.
— Holden Walter-Warner
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