Kering is spending big to build its presence on Fifth Avenue.
The luxury conglomerate paid $963 million, or 885 million euros, for 715-717 Fifth Avenue, a prime piece of real estate on the southeast corner of 56th Street that currently houses Giorgio Armani and Dolce & Gabbana. The building includes a multilevel, 115,000-square-foot retail space.
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The site could eventually house certain of Kering’s luxury brands given that Dolce & Gabbana is expected to relocate its store to 695 Madison Avenue on 62nd Street, while Giorgio Armani is expected to leave the site upon the completion of the designer’s mixed-used project currently under construction at 760 Madison Avenue.
With the exception of Gucci in the Trump Tower, none of Kering’s luxury brands have stores along Fifth Avenue. Kering’s portfolio includes Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, DoDo, Qeelin, Ginori 1735 as well as eyewear and beauty lines.
Kering’s Fifth Avenue real estate deal, disclosed Monday, follows Prada’s acquisitions of 724 Fifth Avenue, which houses the Prada flagship store, and 720 Fifth Avenue next door for a combined $835 million.
“Prada, Kering and LVMH have cash on their balance sheets and are looking to make good use of their capital to control the destinies of their brands,” Gene Spiegelman, vice chairman and principle of Ripco Real Estate, told WWD. “Their global luxury brands have been located on Fifth Avenue and 57th Streets for decades and expect they will be here for decades more, so it makes sense for them to own their real estate, long term.
“From the seller’s perspective, particularly with the 715-717 Fifth Avenue building, clearly vacancies are coming up but also with the market for commercial debt being very expensive, the owner would not be able to refinance at current debt levels if debt was coming due, so it makes sense to sell the properties,” Spiegelman added.
Landlord Jeff Sutton sold the Fifth Avenue properties to Kering and Prada. Sutton has an extensive real estate holdings on Fifth Avenue, 34th Street, in Times Square, SoHo and other areas in the city.
“With this transaction, Kering acquires exceptional retail locations on one of the world’s most iconic avenues,” the company indicated in a statement Monday on the 715-717 Fifth Avenue purchase. “This investment represents a further step in Kering’s selective real estate strategy, aimed at securing key highly desirable locations for its houses. In addition to recently acquired prime properties on Avenue Montaigne and Rue de Castiglione in Paris, the group’s portfolio includes landmark assets in Tokyo’s Omotesando, and the Hôtel de Nocé housing Boucheron’s Paris flagship. In line with its longstanding financial strategy, Kering intends to execute a disciplined and flexible approach with regards to the management of its real estate portfolio.”
Another real estate source suggested that to rent 715-717 Fifth Avenue, rather than owning, would be cost prohibitive, at around an estimated $50 million a year, based on $3,000 per square foot for the ground level, and approximately $200 a square foot for the rest of the space in the 115,000-square-foot retail area.
Recent high-profile Fifth Avenue openings include Chopard, Swarovski, Citizen Watch and the reimagined Tiffany flagship. The former Abercrombie & Fitch site at 720 Fifth is vacant after A&F last summer relocated to 668 Fifth Avenue to a location formerly occupied by the company’s Hollister brand. The former Tommy Hilfiger space at 681 Fifth Avenue is also available, and the Banana Republic store at 626 Fifth Avenue in Rockefeller Center is available. Louis Vuitton will temporarily move into the former Niketown space on East 57th Street while it renovates its Fifth Avenue and 57th Street flagship; Chanel fine jewelry will soon open on the avenue. Rolex is constructing a new building on Fifth Avenue and 53rd Street, and the former Valentino space is temporarily leased to Burberry, among other changes happening on the avenue.
In 2023, Kering marked its 10th anniversary and had a string of deals, including taking beauty in-house; acquiring Creed; investing in Valentino and forging a strategic alliance with Qatari investment group Mayhoola. The company also recruited new designers for Gucci and McQueen; parted ways with longtime Gucci executive Marco Bizzarri, and entrusted Saint Laurent president and chief executive officer Francesca Bellettini with overseeing all the brands in the French group’s portfolio. In 2022, Kering had more than 47,000 employees and revenue of 20.4 billion euros.
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