Spanish retailer Inditex SA said it bought the former NBA Store at 666 Fifth Ave. in Manhattan for $324 million, in a record deal for a U.S. retail property.
The company will make the 39,000-square-foot (3,600-square-meter) storefront between West 52nd and 53rd streets into a flagship store for its Zara clothing chain, Arteixo, Spain-based Inditex said today in a statement posted on its website. The site was the home of a National Basketball Association shop that sold team jerseys and other memorabilia.
The transaction values the space at about $8,300 a square foot. That exceeds the $8,000 a square foot paid in 2008 for a 6,000-square-foot retail outlet at 713 Madison Ave., according to Real Capital Analytics Inc., a New York-based company that researches commercial property sales worldwide.
“Demand from global retailers is pushing values for irreplaceable locations to new heights in city centers all around the world,” Dan Fasulo, Real Capital’s managing director, said in an e-mail.
The 41-story tower that houses the store, completed in 1957 and originally known as the Tishman Building, has been the site of two other price records since 2007. Kushner Cos. paid $1.8 billion for the building that year, then a record for a single U.S. property. Last year, the parent of Japanese clothier Uniqlo rented retail space at the building for 15 years for $300 million, the most expensive lease for a New York store.
‘Major Fashion Shopping’
The site, close to Rockefeller Center, the Museum of Modern Art and St. Patrick’s Cathedral, is “one of the major fashion shopping areas in the world,” Inditex said today.
Carlyle Group, the world’s second-largest private-equity firm, and Crown Acquisitions paid $525 million for a stake in the retail portion of 666 Fifth Ave. in 2008, as real estate values were sliding during the credit crisis. That deal helped Kushner cover some of the debt incurred in its 2007 purchase.
Kushner’s sale of the interest valued the retail space at $6,187 a square foot, according to Real Capital. Kushner kept a 51 percent stake in the retail segment after the transaction with Carlyle and Crown, and retains 51 percent of the remaining retail after Inditex’s purchase, said a person familiar with the structure who declined to be identified because the ownership breakdown is private.
Inditex will spend a total of $400 million on the property, with $324 million going to the sellers, said another person familiar with the transaction. The $76 million difference includes payments to the NBA to buy out its lease and the cost of reworking the space to Zara’s needs, said the person, who asked not to be identified because the agreements are private.
The building’s owners are planning today to complete a refinancing of the retail portion of the property that they retain, the person said.
Inditex was represented by the New York-based U.S. division of Savills Plc, a London-based real estate services firm, said Parke Chapman, a Savills spokesman.