Chanel in Talks to Buy Retail Space at Extell’s 655 Madison for Around $450M

Luxury fashion brand Chanel may join the likes of Kering and Prada in owning their own piece of New York City real estate.

Chanel is negotiating to buy the retail space at Gary Barnett’s proposed tower at 655 Madison Avenue, providing him with an anchor tenant that could help get the tower financed, Commercial Observer has learned. 

Multiple sources told CO that Chanel may pay in the mid-$400 million for around 65,000 square feet of retail space in the base of the future luxury condominium project that Extell plans to build on the northeast corner of East 60th Street and Madison Avenue. 

At $450 million, the transaction would equal a blended $7,000 per square foot. The deal would involve space on both higher floors and below street level.  Until signed and sealed, the deal isn’t done, sources said.

Chanel had been negotiating to purchase multiple floors across the street in the Barneys building at 660 Madison Avenue at around $600 million, but sources said those talks broke down last year over a brokerage fee.

Chanel is being represented by Paul Muratore of Insite Luxury Consulting, who did not return requests for comment, in the discussions.

Barnett and Chanel also did not respond to requests for comment. 

Chanel already has a presence in Midtown with a watch boutique at 730 Fifth Avenue and another fashion shop nearby at 15 East 57th Street. 

Last year, Barnett paid $160 million to buy the older office building at 655 Madison from Williams Equities with financing from Tyko Capital, backed by Elliott Investment Management.

In February, Barnett ponied up another $103.3 million to Jane Goldman for three adjacent townhomes to the east at 33 to 39 East 60th Street. These add 80 feet of frontage to the 109 feet he already had on East 60th Street and could provide plenty of space for a lobby. 

655 Madison has 102 feet of frontage along Madison Avenue, where Chanel would have its storefront. 

The townhomes also run 102 feet north, making the development site a 16,000-square-foot rectangle for a tower spanning roughly 192,000 square feet.  

The smaller properties also abut Zeckendorf Development’s 520 Park Avenue luxury condominium, where there are west-facing lot line windows.

So far, no architects have been named, permits applied for, nor renderings released for the Extell project.   

Barnett, however, filed plans earlier this month to demolish the three buildings, stating there are no longer residential tenants. Restaurants Phillipe and Il Mulino remain open at the buildings but may be shuttered by the end of June, sources told CO. As of March 18, the Department of Buildings had received objections to the demolition of all three.