Savills Relocates Bulgari Corporation of America Remain within Two-Block Radius of U.S. Flagship Store
The iconic jeweler Bulgari has been a client of Savills since 2007, when the same Savills team represented the luxury retailer in the relocation of its U.S. headquarters to 625 Madison Avenue from 730 Fifth Avenue, which has been the location of its U.S. flagship retail store for decades. Under a sublease from Related Companies at 625 Madison Avenue, Bulgari was paying a rental rate substantially below market in the heart of the Plaza District of Manhattan. With its sublease expiring in March 2015 with no right to renew in place, Bulgari retained Savills again in 2013 to plan and implement a strategy for its New York facilities. Following a three-year renewal at 625 Madison Avenue, this marked the third assignment awarded to the Savills team by Bulgari.
From day one of this new assignment, the biggest challenge for Bulgari and Savills was a familiar one, reminiscent of what faced them in the previous two transactions: locating the company within a two-block radius of their retail space at 730 Fifth Avenue. What made this new assignment more challenging than the last ones was Bulgari’s then below market rent at 625 Madison Avenue, to which the management of the luxury retailer had become accustomed as a reliable benchmark for their office space expense in Manhattan. For reference, comparable buildings in the Plaza District at the time of this assignment had rents ranging between $70 per square foot and $200 per square foot. Even at its then headquarters location at 625 Madison Avenue, Bulgari’s most direct units were priced approximately 40% above Bulgari’s rental overhead.
Savills blanketed the entire two-block radius of the client’s flagship retail store. Every building owner and landlord agent of appropriate buildings within these narrowly defined geographic parameters was contacted, and the buildings were thoroughly assessed regardless of their availability. Hidden space was uncovered with an uncompromising monitoring of tenant activity and any potential for future availabilities.
Having combed through all the buildings for nearly two years, the Savills team was ultimately authorized to negotiate for the entire 9th floor at 555 Madison Avenue, a Class A office building at the corner of 56th Street that would meet both the operational and financial objectives of Bulgari Corporation of America. The building’s proximity to 730 Fifth Avenue made it possible for the employees to maintain easy communications with their retail group. The space also presented very reasonable occupancy costs along with a significant concession package for a 16-year lease transaction that the Savills team negotiated, which included 13 months of free rent and a significant amount of tenant work allowance. This enabled Bulgari to meet its financial objective, which at times appeared daunting. For reference, the adjacent building located at 65 East 55th Street, on the same block as 555 Madison Avenue, would have cost 100% more for comparable floors at the time of the negotiations.