Vornado Realty Trust is leading a partnership to buy the retail portion of the St. Regis Hotel on Manhattan’s Fifth Avenue for about $700 million, gaining space on one of the world’s most expensive shopping corridors.
The real estate investment trust joined with Crown Acquisitions, a New York-based property firm that specializes in retail space, in a deal for the stores, which have 100 feet (30 meters) of frontage on Fifth Avenue at 55th Street. The acquisition also includes an adjacent retail townhouse, Vornado said in a statement yesterday.
Fifth Avenue ranks behind only Hong Kong’s Causeway Bay among the costliest retail locations, according to Cushman & Wakefield Inc. The St. Regis space is leased to Kering SA’s Gucci division for its Bottega Veneta brand, and to LVMH Moet Hennessy Louis Vuitton SA, which uses its portion for a De Beers store, Vornado said. Kering’s lease expires in January 2016, and LVMH’s three years later.
The purchase price works out to $28,340 per square foot, according to Real Capital Analytics Inc. The U.S. record was the $31,333 a square foot that Chanel SA paid for Upper East Side retail space earlier this year, the research firm said.
Vornado said it will own 67 percent to 80 percent of the Fifth Avenue property, with Crown owning the rest. Those percentages will be based on how much debt the partners obtain and Crown’s short-term option to invest additional capital, Vornado said.
The New York-based property trust is among the biggest owners of Manhattan street retail, with 2.8 million square feet (260,000 square meters) at 63 properties. Those include 689 Fifth Ave. on the same block.