Ralph Lauren renews Madison Ave flagship, downsizes HQ
Leases at 867 and 650 Madison reflect opposing trends in retail, office
Fashion powerhouse Ralph Lauren is keeping its flagship store on Madison Avenue but downsizing its headquarters 11 blocks south.
But The Real Deal has learned that Ralph Lauren also signed an 11-year renewal for its headquarters at 650 Madison Avenue that shrinks its footprint there by 39 percent. It will make do with just the fifth through seventh floors, totaling 133,000 square feet — about 86,000 fewer than now.
The deals reflect the post-pandemic fortunes of the retail and office sectors.
A 2019 rent roll showed Ralph Lauren occupied 219,000 square feet at a rent of $113 per foot and lately has been occupying 250,000 square feet, sources said.
The new rent starting amount could not be learned but base asking rents at 650 Madison are in the $90s annually per square foot. JLL and CBRE declined to comment.
The building is owned by Vornado Realty Trust along with Oxford Properties Group and the Ontario Municipal Employees Retirement System.
Ralph Lauren has been in the building, just below East 60th Street, since 1989. A lease signed in 2009 showed it was to occupy the fifth through eighth floors plus either the ninth or 10th along with other expansion rights and basement space. That lease was to end Dec. 31, 2024, with one 10-year renewal. The lease has been amended several times.
A CBRE team of Ken Meyerson and Eric Deutsch represented the fashion company, which also renewed a 250,000-square-foot lease for its creative group at Starrett-Lehigh in October and appears to have shed 350,000 square feet there while doing so.
The 600,000-square-foot office building at 650 Madison Avenue was represented by a JLL team including Frank Doyle and Mitch Konsker.
Vornado, CBRE and JLL did not return requests for comment.
The Vornado- and Oxford-led joint venture acquired the property in 2013 for $1.3 billion. Prior to the pandemic, the owners refinanced the 27-story mixed-use building for $800 million; it was 98 percent occupied at the time.
In June, Fitch downgraded the loan backing the tower, citing concerns about vacancies and the Ralph Lauren lease. In September, however, Vornado, which has a 20.1 percent stake in the building, showed the loan had an attractive 3.49 percent interest rate and could be extended through 2029.
Vornado’s website only shows space available on the entire fourth floor (44,000 square feet) and 12th tower floor (13,000). It lists only one other major office tenant, Lakewood Capital, and retail tenants including Balmain, Bape, Celine, Moncler and Tod’s.
The building is also home to Sotheby’s International Realty but lost tenant Memorial Sloan Kettering during the pandemic.
In March, Ralph Lauren expanded its photo studio occupancy at The Factory in Long Island City from its original 19,000 square feet to just under 55,000. It has office space in Chelsea at 601 West 26th Street and in Nutley, New Jersey.
Ralph Lauren said earlier this year that it wants to add 250 stores around the world but would shrink its North American occupancy by 30 percent.