Two high-profile retail real estate spaces are on the sublease market at Coca-Cola’s 711 Fifth Avenue between East 55th and East 56th Streets, Commercial Observer has learned. They include the spaces leased to Ralph Lauren and Breguet.
Ralph Lauren closed its Polo flagship clothing store at the base of the 18-story office building in April after two years of operation. A Cushman & Wakefield team led by Gene Spiegelman is marketing the 38,638-square-foot space including the 10,034-square-foot restaurant, The Polo Bar, according to a marketing booklet for the space. (Spiegelman declined to comment.)
The 12-year sublease deal would allow a retailer to occupy the 28,335 square feet, which housed the store (6,859 square feet at grade, 6,790 square feet on the second floor and 14,686 on the third floor). And, the new retailer would have to “sublease back to [Ralph Lauren] the restaurant premises… [and Ralph Lauren] will continue to operate The Polo Bar,” according to the lease offering details. The restaurant occupies ground-floor, basement and ancillary spaces for back-of-house functions.
CBRE’s Richard Hodos, who represented the fashion designer in its 2013 lease at 711 Fifth Avenue, told CO that “the store was larger than they needed. They probably could have done the same amount of business in 8,000 feet.”
One source with knowledge of the situation and who spoke on condition of anonymity said: “I think in retrospect, the fact it was just a Polo store and it didn’t have all of the other brands in it, they were limited in what they could do.”
Coca-Cola did not want to let Ralph Lauren out of its half-a-billion dollar-plus lease at the Coca-Cola Building, with annual rents of $25 million for the first five years, $27.5 million for the next five years and $30 million for the last five, a source said.
“Leases with The Coca-Cola Company remain in effect,” a company spokeswoman emailed. “Both Breguet, part of the Swatch Group, and Ralph Lauren are responsible for any potential sublease of their space at 711 Fifth Avenue. The Coca-Cola Company is not a party to any brokerage selection processes for these spaces.”
Like other retailers, Ralph Lauren has been struggling amid the current state of retail.
When Ralph Lauren Corporation announced in April the closing of the 711 Fifth Avenue store (with the restaurant remaining open), Jane Nielsen, Ralph Lauren’s chief financial officer, said in a news release: “We continue to review our store footprint in each market to ensure we have the right distribution and customer experience in place. The decision will optimize our store portfolio in the New York area and allow us to focus on opportunities to pilot new and innovative customer experiences. The Polo brand remains strong, and we expect it to further strengthen as we continue to evolve the Polo product and marketing.”
Breguet has its space on the sublease market with a Newmark Knight Frank team led by Jason Pruger. Breguet’s 4,028 square feet (2,525 square feet on the ground floor and 1,503 square feet on the lower level for back-office functions) is available for a 12-year sublease, a marketing flyer indicates. A source said Breguet is seeking $3,000 per square foot. The store is relocating to 2,500 square feet at the base of the St. Regis Hotel at 699 Fifth Avenue at East 55th Street. (Pruger declined to comment.)
“They’ll probably take their other brands and bring them up to the St. Regis because it’s just a better location,” said C. Bradley Mendelson of Colliers International, who negotiated Breguet’s space at the St. Regis while at Cushman & Wakefield. Those other Swatch brands include Omega, which occupies the rest of the retail space at 711 Fifth Avenue, including 3,700 square feet on the ground floor, and Blancpain, which is at 645 Fifth Avenue between East 51st and East 52nd Streets. “The closer you get to 57th Street the better the market is for luxury,” said Mendelson, who negotiated 15-year “blend and extension” deals a few years ago for Breguet and Omega at 711 Fifth Avenue.
Fifth Avenue between 49th and 60th Streets has notched wildly high rents, becoming cost prohibitive for many retailers.
“When you’re dealing with these kinds of rents, there’s little room for error, especially in this retail environment,” one broker said.
With additional reporting provided by Rey Mashayekhi.