Fifth Avenue and Madison Avenue have been on recovery road for the past two years, but there’s still plenty of space to fill.
For the past few years both of these world-class avenues have been repopulating with top designer and brand stores and larger crowds, creating a sense of resurgence after seasons of appearing blighted by vacant storefronts. Behind the revival are landlords letting rents settle in at more reasonable levels since they peaked around 2015 to 2017; tourists returning to the city, and the world’s post-pandemic renewed interest in shopping brick-and-mortar. After seeing online sales soar during COVID-19 and return to earth last year, designers and brands have a better handle on how to manage online and store operations, balance their resources, and feel more confident about opening stores and integrating the selling channels.
“Madison from 57th to 72nd Streets has really come a long way in its recovery and stabilization,” said Gene Spiegelman, vice chairman and principle of Ripco Real Estate. “During the worst part of the pandemic, 40 percent of the spaces on Madison were available but the availability rate [meaning vacant spaces or stores looking to vacate] has since come down to under 20 percent.”
On Madison Avenue, there has been a flurry of store openings, relocations and expansions — a mix of galleries, restaurants and fashion additions including Elyse Walker, Versace, Still Here, Hermès and Sunspel. Giorgio Armani has a 12-story mixed used project in the works at 760 Madison; Michael Kors has a major store going up at 667 Madison; Van Cleef & Arpels expects to open at 690 Madison next fall, and Sotheby’s will house its global headquarters at 945 Madison Avenue, relocating from 1334 York Avenue.
Another major change is the redevelopment of the Plaza Athénée, which has been closed since the pandemic and is being transformed into the Plaza Athénée Nobu Hotel & Spa New York, at 37 East 64th Street, right off Madison.
“The overall tenor is that people are recognizing that now is a good time to reinvest” in the avenue, said Matthew Bauer, president of the Madison Avenue business improvement district, in a recent interview. “We are below the peak of what rents were on Madison Avenue, and the spaces below 72nd Street are really starting to get filled out.” The opening of Hermès in fall 2022 at 706 Madison was “the tipping point” helping to bring back the avenue’s reputation as a luxury fashion destination, said Bauer.
While space on Madison is tightening, “There are still some big unknowns,” Spiegelman said, referring to the Related Cos.’ purchase of 625 Madison, which could be developed into commercial space, luxury condos and retail. Also, the former Barneys New York flagship remains vacant, creating a huge void. Ashkenazy Acquisition Corp. owns the former Barneys portion of the building, with the upper office floors of the site owned by the Safra family.
The picture along Fifth Avenue is somewhat different. Recent high-profile openings include Chopard, Swarovski, Citizen Watch and the imagined Tiffany flagship, and Prada paid $425 million to buy 724 Fifth Avenue, which houses its five-level store, the company said last month, a transaction reflecting confidence in the future of Fifth.
“Fifth is still going through its transitions, from 52nd up to 57th where you have a group of available stores,” Spiegelman said.
The former Abercrombie & Fitch site at 720 Fifth is vacant after A&F last summer relocated to 668 Fifth to a location formerly occupied by the company’s Hollister brand. The former Tommy Hilfiger space at 681 Fifth is also available and the Banana Republic store at 626 Fifth Avenue in Rockefeller Center is available. Louis Vuitton will temporarily move into the former Niketown space on East 57th Street while it renovates its Fifth Avenue and 57th Street flagship; Chanel fine jewelry will soon open on Fifth. Rolex is constructing a new building on Fifth and 53rd, and the former Valentino space is temporarily leased to Burberry, among other changes happening on the avenue.
Spiegelman placed aggregate rents along Midtown Fifth at $7 million to $15 million. Ground-floor rents range from $1,500 to $2,000 a square foot, whereas Madison rents average around $1,000 a square foot, from 59th Street through the 60s.
In its annual report on global shopping streets in late November, Cushman & Wakefield said Fifth Avenue retained its spot as the world’s most expensive shopping street with average rents of $2,000 a square foot, followed by Tsim Sha Tsui in Hong Kong and Via Montenapoleone in Milan.
“Fifth Avenue is different from Madison because it’s got a lot of big spaces,” said Spiegelman. “That makes it more challenging because the rent expectations are higher. Rents on a square foot basis have come down but the aggregate is higher.”
The crowd composition on each avenue is different. Fifth is more family- and tourist-oriented, while Madison draws more a local and luxury-only inclined clientele. “The Upper East Side is still the densest affluent community in the U.S. People have returned,” said Spiegelman.
