Fifth Avenue Store Adds Value to Building

The sale of the General Motors building property that houses the Fifth Avenue (NYC) store has been finalized, with Boston Properties Inc. paying $2.8 billion for the one square-block adjacent to Central Park. Previous owner Harry Macklowe was forced to sell the property because of excessive debt, made worse by the downturn in real estate. According to an article in the Wall Street Journal, executives from Boston Properties, “believe that the building’s retail space alone, which includes a well-trafficked Apple Inc. store, is worth more than $1 billion.” Other tenants on the property include FAO Schwartz, with 66,465 square-feet at ground level, and several tenants in 6,000 square-feet on the Madison Avenue side of the building. In another development, there are rumors that Boston Properties might buy out FAO’s lease–ending in 2012– so it can squeeze out increased rates from a new tenant. Real estate sources say FAO is paying about $71 per square-foot per year on nearly one-half of its space, in an area where the market rate is over $1,000 per square-foot. Real estate analysts believe Macklowe lured Apple to the site with a lease charging about $100 per square-foot.