If your taste in art veers toward images of Richie Rich or Scrooge McDuck, Eden Gallery may be your sort of place. The contemporary art retailer opened at 645 Fifth Ave. a year ago, filling a 20,000 square-foot hole created when Armani Exchange moved out.
Eden’s arrival – alongside apparel store Skims and soon by watch-shop Hublot – underscores the recovery underway along Fifth Avenue, which not long ago was seeing retailers flee and those who set up shop extracted rent discounts of 75% or even more. But in a report this week, Fitch Ratings said performance is stabilizing at 645 Fifth, also known as Olympic Tower. Retail storefronts, which account for about a quarter of the tower’s space but nearly two thirds of the rent, are fully leased and average in-place rents have risen 7% in the past year.
Improved tourist traffic is a big reason for Fifth Avenue’s recovery. Another is excitement over plans unveiled by the city in October to double the width of the avenue’s sidewalks, create space for outdoor seating, and reduce car lanes. The $350 million redevelopment project isn’t expected to begin until 2028, however.
“Fifth Avenue has been very hot since the Future of Fifth project came out,” said Madelyn Wils, interim president of the Fifth Avenue Association, a business group.
The avenue is traversed by 23,000 people per hour during the peak holiday season, according to the city. That explains why a year ago Louis Vuitton said it would redevelop its flagship tower at the corner of East 57th Street, while Prada and the parent of Gucci paid huge sums to acquire properties for their flagship stores.
That said, the avenue’s recovery is far from complete. Several larger storefronts remain vacant between 53rd and 55th streets, according to a report this week from the Real Estate Board of New York, which said higher-end locations have been “tougher to lease.” At 645 Fifth, at the corner of East 51st, retail rents remain 14% below pre-pandemic levels, said Fitch. The credit-rating agency added the building’s financial outlook remains “negative” because it relies so heavily on retail and new tenants, such as the Kim Kardashian-founded shapewear store Skims, may not generate the projected revenue.
Altogether, average asking rents between 49th and 60th streets were 5% lower in the fourth quarter than the prior-year period, Cushman & Wakefield says, indicating tenants still hold the balance of bargaining power.
But talks are underway between landlords and prospective tenants to fill nearly all the vacancies. Hublot is expected to open soon at 645 Fifth in space subleased from Furla, the handbag merchant.
“The spaces where you can make deals have quite a bit of action,” said Steven Soutendijk, executive managing director at Cushman & Wakefield.
One place that’s seemingly off the market is 673 Fifth Ave., at the corner of East 53rd St. The 8,000 square-foot corner space has been vacant since at least 2014, according to people familiar with the matter. The property is owned by 673 Fifth Avenue Corp., a Chinese-controlled entity that acquired the seven-story building in 1991 for about $25 million and paid off the mortgage in 2001, city records show.
Since the retail space became vacant in 2014, the owner has kept a low profile. In 2017 it sued the city over its property-tax assessment and the matter appears to have been settled out of court. The owner couldn’t be reached for comment and an attorney for the enterprise didn’t return an email or call.
Wils believes the owner is waiting for Rolex to complete its new tower across the street. Construction is expected to be completed in December, according to a sign on the site. Whenever it happens, that should make 673 Fifth’s vacant retail space more attractive.
“It’s probably going to need a lot of work,” she said. “But it’s a great location.”
