New York
Barnett sells Sitt Carlton House retail for $277M — may be a record for Madison Avenue
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Joe Sitt takes $97M loss on one of Madison Avenue’s priciest retail properties
Palm Beach-based TZ Capital paid $180M, 35% discount to 2013 price
From left: TZ Capital’s Sam Zuckert; Thor Equities’ Joseph Sitt; TZ Capital’s Tyler Tananbaum; 680 Madison Avenue storefronts (Getty, TZ Capital, Thor Equities)
Joe Sitt’s Thor Equities took a big loss on a Madison Avenue property that epitomized the frenzied retail bubble of a decade ago.
Thor sold the retail at the base of the Carlton House condop to Florida-based investor TZ Capital for $180 million, a source familiar with the sale told The Real Deal. The price is about 35 percent off the $277 million Thor paid for the property in 2013 — one of the most expensive deals ever on Madison Avenue.
This sale marks two distinct eras in New York retail. When Thor bought the property, investors were in a frenzy to buy properties as retail rents shot up astronomically, and in the process, pumped up a speculative bubble that eventually burst.
After years of declining rents and investor defaults, retail is now experiencing a slow recovery. And investors like TZ Capital see reason to start buying again.
A representative for Thor did not immediately respond to a request for comment, and a spokesperson for TZ Capital declined.
The primary source of money for the purchase comes from the family office of financier Steven A. Tananbaum, founder of the credit investment firm GoldenTree Asset Management. Tananbaum’s son, Tyler, founded TZ Capital in November with his partner Sam Zuckert. The two have also raised from other investors and are eyeing more real estate deals to buy.
The Carlton House retail at 680 Madison Avenue is a leasehold on the 34,000 square feet of space that wraps all the way around the front of Madison Avenue between East 61st and 62nd Street. It’s fully leased to Tom Ford, Brioni, Oscar de la Renta, Morgenthal Frederics, Missoni and Asprey.
Thor bought the property from Gary Barnett’s Extell Development, which had purchased the building for $170 million in 2010 with Angelo Gordon and converted the upper floors into 68 apartments.
It was one of the most expensive retail purchases of the era, and raised eyebrows for the risk involved.
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The year after the sale, retail rents peaked in 2014 and the speculative investment bubble burst soon after. Rents fell for years, and only started a steady if lukewarm recovery last year.
Thor tried to sell the property in 2019 eyeing $370 million, though no sale ever materialized.
There has been some recent interest in retail though, especially from tenants. Gucci and Prada purchased properties on Fifth Avenue from Jeff Sutton’s Wharton Properties for a total of $1.8 billion.
And a few blocks north of Carlton House, Swiss luxury fashion house Akris bought a retail property at 772 Madison Avenue at East 66th Street from SL Green for about $40 million.