What a difference four years makes.
On Christmas Eve in 2019, Prada handed its landlord at 724 Fifth Avenue, Jeff Sutton, a lawsuit. This holiday season it handed him $835 million to buy the building and 720 Fifth next door, Bloomberg reported.
Word of the $425 million deal for Prada’s flagship at 724 Fifth leaked last week, followed by news Friday of an approximately $410 million purchase of the neighboring property.
Sutton’s big bets on Fifth Avenue retail decades ago made him a billionaire years later, when rents on the Midtown shopping corridor surged to unimaginable levels along with tourism in the city and the fortunes of the wealthy.
The area lost momentum when luxury buyers pulled back in the 2010s, the pandemic temporarily strangled international travel, and some brands decided they could do without a Fifth Avenue flagship. Tommy Hilfiger, for example, abandoned 681 Fifth in 2019, even though it continued to pay rent to landlord Metropole for four years. A 2021 survey found 30 vacant storefronts there.
But recently, luxury brands such as Louis Vuitton and some Fifth Avenue building owners have been pouring money into properties along the strip. In a Hong Kong stock exchange filing about its purchase, Prada cited 724 Fifth’s strategic value and the spate of residential, hospitality and retail investments in the neighborhood, Bloomberg reported.
Eastdil Secured’s Will Silverman, who brokered the deal of the 65,000-square-foot 720 Fifth, told the publication, “There are more global luxury brands than there are prime corners left on Fifth Avenue.”
Another factor may have been the outcome of Prada’s 2019 lawsuit against Sutton’s Wharton Properties, which involved Sutton’s plans to renovate 724 Fifth Avenue. The renovation would have forced Prada to move temporarily, and court rulings on the lawsuit left that possibility in place. Buying the building and the one next door gives Prada control of its destiny, although it came at a hefty cost.
The litigation revealed tension in the relationship between the two sides, as well as Prada’s rent at its flagship store: $22 million a year and escalating regularly.
But a year ago, the two sides got back on good terms, paving the way for the $825 million deal, which came together in just 19 days, a source said. It is one of the largest investment sales in the city this year, if not the largest.
Prada occupies about 15,500 square feet over four floors in the 12-story building at 724 Fifth Avenue, which is between 56th and 57th streets, and has office space on the fifth floor. Its lease, which was renewed in 2013 starting at $19 million a year, runs through 2028. Prada has been leasing there for 25 years.
Sutton refinanced 724 Fifth for $235 million three times — in 2014, 2017 and 2021 — and for $260 million in January. He and SL Green had bought the building for $200 million in 2012. Sutton’s company took full ownership of it in 2018 by buying out SL Green’s 50 percent stake.
— Erik Engquist
This story has been updated with additional information about the 2019 lawsuit.
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