New York City luxury retail property mogul Jeff Sutton is selling some of his trophy properties on Fifth Avenue to global luxury conglomerates that have cash and are looking to use it to control the destinies of their brands.
Gucci parent Kering acquired a 115,000-square-foot, multilevel retail space at Fifth Avenue and 56th Street from Sutton and SL Green Realty Corp. for $963 million this week. And last month, Italian luxury group Prada paid Sutton a combined $835 million for 724 Fifth Ave., where it has leased a store since 1997, and the neighboring 720 Fifth Ave., currently home to an Abercrombie & Fitch store.
Kering — which also owns such upscale brands as Saint Laurent, Bottega Veneta, Balenciaga and Alexander McQueen — has not announced which brand or brands will take over the space it has purchased. Privately owned luxury labels Dolce & Gabbana and Giorgio Armani will vacate soon. Armani operates a boutique at 760 Madison Avenue.
Driven by aggressive store expansion, luxury retailers enjoyed remarkable revenue gains in 2023. The U.S. remained the largest luxury market globally last year, accounting for an estimated 32% of global luxury sales, according to a September report from JLL. And prime urban retail corridors like Fifth Avenue are benefiting from the gradual return of tourists and hybrid office workers. Foot traffic on Fifth Avenue climbed by 17% in 2023, according to JLL’s City Retail 2024 report.
Despite the high price of purchasing prime property, luxury conglomerates might be better off owning than renting. Fifth Avenue retained its ranking as the world’s most expensive retail destination with annual average rent of $2,000 per square foot in 2023, which is unchanged from last year, according to Cushman & Wakefield’s annual Main Streets Across the World tally.
Kansas City’s surging experiential entertainment scene offers a blueprint for reviving vacant spaces across the US. In 2023, escape rooms, pickleball and more sprouted in downtowns, malls and even old factories. The trend shows no signs of slowing, with major projects on the horizon.
The city’s famous Country Club Plaza added thrills: an escape room called The Escape Game and an immersive mini golf and bar concept from Drive Shack called Puttery. Beyond downtown, Watts Mill Plaza got sporty with football bowling concept Fowling Warehouse, while K1Speed opened a massive go-karting complex in the city of Lee’s Summit.
Puttery Kansas City
Kansas City’s foray into experiential entertainment gained significant momentum in 2023. Family-oriented destinations like Pump It Up, which offers inflatable structures, and indoor playground Kids Empire added to the entertainment landscape, while music venue Warehouse on Broadway caters to an older demographic. Niche concepts like AME Golf & Brew Lounge and pickleball and dining venue Serv have further broadened the city’s experiential offerings.
Downtown’s Pennway Point began its phased opening in December, anchored by the iconic KC Wheel observation wheel. Local food-and-beverage concepts, mini golf and the Instagram-worthy Neon Alley contribute to the district’s vibrant atmosphere. Master tenant DaVinci KC plans more, including outdoor games, volleyball courts and an ice skating rink.
The influx of experiential tenants last year helped drive the market’s shopping center vacancy rate down 30 basis points to a healthy 6.2%, according to Colliers. Broader retail vacancy declined 10 basis points to 4.2%. Retailers are vying for space, pushing rents higher and higher, the firm reported in its Kansas City 2024 Commercial Real Estate Forecast Report. The total retail market average asking rent ended the year at $14.87 per square foot, the best spaces and new developments commanding significantly more.
In the meantime, the $838 million Homefield Kansas City is underway with indoor and outdoor sports facilities, hotels, apartments and retail components. A $20 million BigShots Golf complex and a 30,000-square-foot interactive museum and immersive theater called Atlas 9 will anchor the project when it starts opening in phases this spring.
Additionally, Golf Ranch will open in Lee’s Summit in 2024 with 40 hitting bays, outdoor mini golf and dining. And another go-karting chain, Andretti Indoor Karting & Games, will open a 103,430-square-foot space at the Aspiria master-planned community in summer 2025. Developers also are converting the historic Rock Island Bridge into a 700-foot-long, 35,000-square-foot venue with bars, restaurants and other outdoor activities for a summer opening.
Are you working on something exciting in Kansas City? Email executive editor Brannon Boswell at email@example.com.
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Realty Income closed on its previously announced merger with Spirit Realty. With Spirit in its portfolio, Realty Income has an enterprise value of approximately $63 billion and more than 15,000 net lease properties. The company has been a leading consolidator in the net lease sector in the past year.
Commercial real estate pioneer Daniel Goodwin, co-founder, chair and CEO of The Inland Real Estate Group of Cos., has died at age 80. The former high school science teacher founded Inland in 1968 with Robert Baum, Joseph Cosenza and Robert Parks. Since then, Inland entities have raised more than $26 billion in capital, done over $80 billion dollars in commercial real estate transactions and sponsored more than 800 investment programs, including eight public REITs. Goodwin himself founded one of the REITs, Retail Properties of America, which would become RPAI and eventually be acquired by Kite Realty.
Inland appointed CFO Anthony Chereso as CEO, effective immediately.
By Brannon Boswell
Executive Editor, Commerce + Communities Today
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