UPDATED, Aug. 28, 7:15 a.m.: The popularly-priced watch store Swatch Group put its location at 666 Fifth Avenue on the market with an asking price of $2,500 per square foot, sources said.
The Swiss-based global retailer is putting its 2,030-square-foot space on the market just two years after it inked a 15-year deal to take the 20-foot-wide store in a pricey stretch of Fifth Avenue, paying about $2,100 per square foot.
Swatch had marketed the space quietly for several months, sources said, but yesterday the listing hit the real estate data website CoStar Group, which reveals the lease has about 12 years remaining.
The location is wedged between Japanese retailer Uniqlo and the American casual brand Hollister, at the base of the 41-story-office tower, located between 53rd and 54th streets.
Cushman & Wakefield Vice Chairman Bradley Mendelson, and Executive Director Alan Schmerzler are representing Swatch.
Swatch has several stores in popular shopping districts in Manhattan, and appeared to be capitalizing on the strong rents to get out of this space with no financial downside, Faith Hope Consolo, an associate real estate broker at Douglas Elliman, said.
“I don’t think Swatch needs to be there. They have many other locations that are highly visible,” she said.
She added, “I don’t think it is a sign of weakness [for Fifth Avenue],” because there are asking rents above $3,000 per foot elsewhere on the stretch.
One industry insider, who asked not to be identified commenting on the listing, nevertheless said, “Nobody takes a profitable store and subleases it.”
Representatives for Swatch did not immediately respond to a request for comment.
In April, Mendelson and Schmerzler represented Swatch in a record $1,000 per foot deal at 112 West 34th Street; the watchmaker took 1,800 square foot at the location. That was the highest price ever paid on the stretch of 34th Street between Fifth and Seventh avenues.
“It’s a great space on the best part of Fifth Avenue, and for the right merchant it is an excellent opportunity,” Mendelson said. He declined to comment on the lease terms or the reason Swatch put the space on the market.
The Fifth Avenue building’s landlord, the real estate investment trust Vornado Realty Trust, might take the space back if it believes it can get a better price, insiders said. It was unlikely that Swatch would make a profit on the deal, despite the potential spread between the $2,100 per foot it pays in rent and the $2,500 per foot ask. Broker commissions and free rent would likely eat up any potential profit, one source said.
The stretch of Fifth Avenue has the city’s highest rents. Valentino recently inked a deal for 693 Fifth Avenue, the former Takashimaya Building, a block from 666 Fifth Avenue, for between $2,600 per foot and $3,000 per foot for the ground floor.
Average Asking Rents On Fifth Avenue between 49th and 59th streets rose 2.7 percent to $3,050 per foot in the second quarter of 2013 from $2,970 per foot the quarter earlier, figures from commercial firm CBRE Group show.