Crown Acquisitions To Help Vertical Retail Agenda In Olympic Tower Buy
Crown Acquisitions has purchased a 49.9 percent stake in Olympic Tower, a four building complex along Fifth Avenue in a deal that valued the property at roughly $1 billion.
Though Crown Acquisitions, a real estate investor and operator, will have ownership in half of a complex that is largely comprised of office space, the company won the bid to buy into the properties largely because of its retail expertise.
Crown, which is run by the Chera family, has invested in several prominent retail assets in the city, including 666 Fifth Avenue, one of the highest profile retail investments and leasing successes in the city in recent years (Jared Kushner, owner of The Commercial Observer, is an owner of 666 Fifth Avenue).
“They were selected in large part because of their success with retail,” said Harry Seherr-Thoss, an executive managing director at Colliers International who handled the sales deal for the owner of Olympic Tower. “We saw what they were able to do with 666 Fifth Avenue and it was incredibly impressive, especially their ability to take the retail in that building to the third floor..”
According to Mr. Seherr-Thoss, Olympic Tower is comprised of four properties that house about 400,000 square feet of office space and residential space and 110,000 square feet of retail. Most prominent the buildings is 645 Fifth Avenue, the 51-story dark glass skyscraper that has office and residential condo space. Adjacent to that building are the other smaller properties, 647 Fifth Avenue, which is about 20,000 square feet, 653 Fifth Avenue, about 45,000 square feet and 10 East 52nd Street, also roughly 20,000 square feet.
The luxury jewelry and watchmaker Cartier occupies 653 Fifth Avenue and 10 East 52nd Street. Armani, Versace and the jeweler H. Stern also have space in the retail component. Mr. Seherr-Thoss explained that the leases are rolling over in the property. Bringing Crown Acquisitions in as an owner would appear to bolster Olympic Tower’s chances at retaining the tenants and also expanding the complex’s retail space. Mr. Seherr-Thoss said that converting 645 Fifth Avenue’s third floor from office to retail was a goal of the venture.
“We saw what they were able to do bringing Uniqlo to 666 Fifth Avenue and creating additional retail space by moving the tenant higher up in the building,” Mr. Seherr-Thoss said.
Retail space, especially on pricey Fifth Avenue, commands a vast premium over office rents. While office space is most often under $100 per square feet in the city, retail in that neighborhood can command $3,000-per-square-foot rates.
But utilizing space vertically in a retail plan is tricky as most tenants prefer to remain at ground level where customers traditionally prefer to shop. Certain concepts have defied that rule however, including the layout of Uniqlo’s store, which ingeniously whisks customers to the third floor and then lets them drift down in a vertically stepped merchandising scheme. Crown Acquisitions is credited with devising that layout and unlocking tremendous additional value at the property.
The Olympic Tower Complex is owned by Olympic Tower Associates, a firm that is controlled by the Alexander S. Onassis Foundation. Alexander Onassis was the son of Aristotle Onassis, a shipping magnate who passed away in the 1970s and who was famously married to Jacqueline Kennedy. Aristotle built Olympic Tower and for a time used the property as the headquarters for his shipping business and other enterprises. The foundation that inherited control of the property was started in memory of his son who died in the early 1970s in a tragic plane crash and donates funds for philanthropic causes in Greece, Mr. Onassis’s home country.