LVMH SAID TO EYE WB’S 57TH ST. SPOT: MAY SET RENT RECORD
Byline: Eric Wilson
NEW YORK — A pair of real estate megadeals are said to be taking place on East 57th Street that could change the face of retailing from the Warner Bros. store site on Fifth Avenue to the Four Seasons down the street.
First, LVMH Moet Hennessy Louis Vuitton appears to be close to striking a deal to take over the location of the Fifth Avenue Warner Bros. flagship, according to several retail real estate specialists. They said LVMH plans to dedicate the space to its Louis Vuitton franchise, even though the company just opened a 6,500-square-foot store at 703 Fifth Avenue and 55th Street in December.
Also on Friday, other sources said the Prada Group has a lease out at the Fuller Building at 41 East 57th Street, on the eastern corner of Madison Avenue, with plans to combine four existing ground-level stores into a three-level, 18,000-square-foot space that would house a store for one or more of its brands — possibly Helmut Lang or Church & Co.
Lang has been rumored to have been searching for an uptown retail location for several months.
If both deals come to fruition, they will mark a dramatic luxury turnaround for that stretch of East 57th Street, which for the past several years has seen an increasing number of more commercialized tenants, including Swatch and Levi’s, come into the fray.
Once Warner Bros. announced its intentions last year to vacate the site at Fifth Avenue and 57th Street, one of the choicest and most expensive retail locations in the world, a variety of companies began to investigate the location. Among those said to have made serious offers are Polo Ralph Lauren, Harrods and Harvey Nichols from London and Apple Computers, but, as real estate sources said on Friday, LVMH has aggressively pursued the location and apparently has settled on a deal with Allied Partners, which owns the building.
LVMH and Allied Partners officials could not be reached for comment. According to sources, they are having direct conversations about a deal for the site, which, brokers pointed out, would easily set a citywide record for commercial real estate.
Rents vary to a great degree from building to building in that neighborhood, primarily because many companies based there operate vertically, using an entire structure for their operations and thereby offsetting the overall cost. But a consensus of brokers said that it is not uncommon for ground-floor retail space to rent from $700 to $800 per square foot, while upper floors typically run in the range of $200 to $250 per square foot.
However, Allied Partners was reportedly asking for a much higher rent, as much as $2,000 per square foot on the ground floor, and upward of $1,000 on the upper levels.
In 1996, Warner’s store — the biggest in the Warner Bros. Studio Store chain — was expanded to 75,000 square feet from 30,000, and from three to nine levels, with about two-thirds of the space for selling. When it opened in October 1993, with its array of apparel, gifts, toys and artwork based on Warner Bros. movies, cartoons and superheros, it was an instant success, drawing huge crowds, even lines waiting to get in, particularly tourists, but it was considered a blight on the retail landscape by some of its tonier Fifth Avenue neighbors, including the Bergdorf Goodman men’s and women’s stores.
Yet observers said that its fast expansion and another Warner’s in Times Square likely began to have an impact on the productivity of its 57th Street location. The company apparently had a long-term lease on 57th Street, with several years remaining, but Allied Partners is believed to have cut Warner Bros. a deal in October to let it out of its obligation early, likely in the interest of finding a more lucrative tenant, as several high-end retailers, from jewelry firms to conglomerates like LVMH, were waiting in the wings.
If LVMH does moves in, the company will have virtually created its own bookends to that block of 57th Street, complementing the LVMH Tower opened in 1998 at 17 East 57th Street, where Christian Dior has two boutiques — one for ready-to-wear and one for fine jewelry.
It would also help return the luster to Manhattan’s “Four Corners,” the famous intersection of Fifth Avenue and 57th Street, where Tiffany, Bulgari, Bergdorf’s and Van Cleef & Arpels have long resided.
“If they get the lease and take over that corner, I think it would represent a tremendous reinforcement to the street,” said Faith Hope Consolo, vice chairman of Garrick-Aug Worldwide, a Manhattan real estate company.
“There is so much change taking place on 57th Street that this could have a great domino effect on other buildings on the block,” she said. “They could squeeze from both sides like an accordion.”
Among the other recent developments along that stretch of 57th Street, Escada recently struck a deal to terminate its lease at 7 East 57th Street, a roughly 15,000-square-foot space that will be turned over to the neighboring Burberry flagship at 9 East 57th Street, which plans to double the size of its existing store. Escada is moving to a 17,400-square-footspace a few blocks away, next to the future Hugo Boss store at 717 Fifth Avenue.
Prada also recently struck a deal to open a boutique for its Jil Sander subsidiary at 11 East 57th Street, replacing the Hermes store after that tenant moved to a 20,000-square-foot space at 691 Madison Avenue last year. That Prada deal was rumored to have topped $750 per square foot.
“If LVMH were to take the Warner Bros. store, that would create a nice complement to its Madison Avenue locations,” said Roger Cohen, a broker with Robert K. Futterman & Associates. “It also reinforces the strength of 57th Street, as there were fears that it was faltering when Escada and Hermes began to move from the street.”
As for Prada’s other rumored deal, company officials could not be reached on Friday. Sources said the company has a lease out at the Fuller Building to replace the retail tenants there, as well as take over a second-floor gallery and a basement level, which would all be combined into a single retail unit, totalling 18,000 square feet. That space currently houses a Prada store that is dedicated to accessories at 45 East 57th Street and had housed a Celine unit at 51 East 57th Street and a J.P. Tods next door, until both of those stores moved uptown to Madison Avenue addresses.
Since Prada already has major locations nearby on Fifth Avenue and Madison Avenue for its signature brand, sources speculated that, if the Fuller Building deal is finalized, the firm would use that space for one of its other brands.
In another LVMH development on Friday, French press reports said the company is building a new production plant in Ducey, in the Manche region. That plant is expected to supply Louis Vuitton’s leather goods division, opening in 2002.