The Carlyle Group has closed what is being called the largest retail leasing deal in New York history, renting space at 666 Fifth Avenue to Japanese clothing company Uniqlo for more than $300 million. The lease is for a 15 year period.
The space will be used for Uniqlo’s global flagship store, with ground floor rents exceeding $2,000-per-square-foot. The clothing retailer will occupy 90,000 square feet on the ground, second and third floors of the Fifth Avenue tower. Carlyle acquired the retail condo in July 2008, together with partners Crown Acquisitions and the Kushner Company, paying $525 million.
Chief executive officer of Crown Acquisitions Stanley Chera said in a statement the retail space on Fifth Avenue has held and even increased in value despite the global economic downturn, adding that the occupancy level on Fifth Avenue has been almost 100 percent throughout the tumultuous environment.
The deal for 666 Fifth Avenue comes amid speculation that commercial real estate markets in the US are starting to bounce back as prices start to rise and leasing activity picks up, contrary to the belief held by many industry professionals that patience is still the name of the game for those looking to take advantage of distressed opportunities.
Further evidence that general transaction activity is on its way up came last week with REIT SL Green’s acquisition of 600 Lexington Avenue from Hines for $193 million – or roughly $636 per square foot – including the assumption of a $49.9 million interest-only loan. Hines had originally bought the property on behalf of its US Core Office Fund for $91.6 million, or $329-a-square-foot, in 2004.
Fears of a bubble though aren’t just restricted to core assets in New York or Washington DC, the US’ top two markets. At the Urban Land Institute’s spring conference in Boston last week there were numerous reports of aggressive bidding for vacant properties in California, for non-performing loans and even land across the US.