Word on the street is that Mac Cosmetics, a division of Estee Lauder, signed aat Vornado Realty Trust’s 691 Fifth Avenue building that breaks the record for the highest rent ever paid for a New York retail space.
The 1,400-sq.-ft. space, formerly occupied by Elizabeth Arden’s Red Door Spa, sits on a prime stretch of Fifth Avenue, near 54th Street.
Vornado officials did not confirm the.
If true, the transaction sets a new high for rental rates in an area that last year already ranked as the most expensive retail strip in the world, according tofirm Cushman & Wakefield. In the fourth quarter, rents on upper Fifth Avenue averaged $2,388 per sq. ft., Cushman & Wakefield reports. The figure reflects 59.2 percent in rental growth over the past five years—a period that included some of the worst years on record for retailers. At the end of 2011, the vacancy rate on Fifth Avenue stood at 6.1 percent.
The East side of the street, where Red Door Spa was based, has been in especially high demand among luxury tenants and the space in the Vornado building has been the only one to come on the market in some time, according to Robin Abrams, principal and executive vice president with The Lansco Corp., aCity-based real estate services firm. The West Side of the street houses the flagship stores of Uniqlo and Zara.
The store at 691 Fifth Avenue is “on the East Side, it’s pretty far North, it’s the only small piece [of retail real estate] available on Fifth Avenue,” says Abrams. “All of these factors provide the landlord the opportunity to price this at a significant level because many retailers have only this one option.”
“Additionally, there was a tenant in place at that particular location that wanted to stay if they could renew. The landlord was in a very strong position and if in fact Mac did lease that space, it would have required them to be very aggressive to encourage the landlord to do a new deal.”
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