Japanese apparel giant Uniqlo has a deal to buy its Fifth Avenue flagship in the latest example of famed retail brands seeking ownership of their New York properties.
Uniqlo is taking its space in two separate transactions.
First, it's buying the portion of 666 Fifth Ave. owned by a retail joint venture where Vornado Realty Trust has a 52% interest, Vornado said Monday in a statement. Vornado’s majority-owned venture controls the fee condominium interest in 17,295 square feet of Uniqlo’s 90,732-square-foot store between 52nd and 53rd streets.
Uniqlo is buying the remainder of the Fifth Avenue store from the office condominium owner, Vornado said.
That would be Brookfield Properties, according to the property website. Brookfield owns the 39-story office property, which it has renamed 660 Fifth Avenue, as it has spent $400 million on an overhaul to offer 1.25 million square feet of commercial space.
Uniqlo approached Vornado and Brookfield to purchase the Fifth Avenue store property with the parties having reached an agreement on "favorable terms," a person familiar with the situation told CoStar News, adding Vornado owns the ground-floor retail and Brookfield owns the retail space on the second and third floors.
Vornado and Brookfield declined to comment. A spokesperson for Uniqlo didn’t immediately respond to a CoStar News request seeking comment.
The deals are expected to close by the first quarter of 2025, Vornado said, adding Eastdil Secured acted as an adviser.
Vornado said it will use the $340 million of net proceeds from its joint venture sale to partially repay $390 million of preferred equity on the property.
The joint venture will continue to own 23,832 square feet of retail space at 666 Fifth consisting of the Abercrombie & Fitch and Tissot stores, Vornado said.
Uniqlo’s purchase comes after a string of high-profile retail sales, led by luxury labels Prada and Gucci parent Kering each buying nearby Fifth Avenue properties.
Besides 666 Fifth, Vornado’s retail joint venture includes other properties on Manhattan’s iconic Fifth Avenue shopping corridor south of Central Park, as well as in Times Square: 655 Fifth, 689 Fifth, 640 Fifth, 697-703 Fifth, 1535 Broadway and 1540 Broadway, according to Vornado's annual filing.
Vornado recently also completed a $400 million refinancing loan at 640 Fifth Ave., which houses Victoria's Secret's flagship.
The transactions come as New York’s retail leasing is showing more signs of recovery from the pandemic, helped by a growing number of tourists and office workers who have returned to the city. A case in point, Vornado’s second-quarter retail occupancy rate in New York rose to 77% from about 75% a year earlier in contrast to its New York office occupancy rate dipping to 89.3% from 90.7%, the company reported Monday. In another sign, a marquee retail property at New York’s tourist and entertainment hub of Times Square recently commanded one of the highest per-square-foot retail sale prices of the year in Manhattan.
Vornado will host an earnings conference call Tuesday.