Chanel eyes $450M retail deal at Extell’s 655 Madison

Gary Barnett’s luxury project at 655 Madison Avenue is a ways away from reality, but he may have already found a retail tenant willing to pay big bucks to secure its space.

Luxury fashion brand Chanel is in discussions to purchase the retail space at the Midtown Manhattan development, the Commercial Observer reported. Chanel may pay in the mid-$400 millions for the 65,000 square feet at the corner of East 60th Street and Madison Avenue.

The deal, which has not been finalized, would give the brand space on the ground floor, as well as below street level and on higher floors. The blended price of a $450 million deal would break down to $7,000 per square foot.

Outside of the large price tag, Extell Development could also benefit from the presence of Chanel as a means to help secure financing for the project.

Insite Luxury Consulting’s Paul Muratore is representing Chanel in the discussions.

The fashion brand previously negotiated for space across the street at 660 Madison Avenue, where it was willing to pay around $600 million. Those talks collapsed over a brokerage fee dispute. Chanel’s presence in Midtown also includes a watch boutique at 730 Fifth Avenue and a fashion store at 15 East 57th Street.

Should Chanel ultimately purchase the retail space, it would join a growing list of luxury retailers keen to own their own spaces in Manhattan.

Last year, Kering — the French luxury group that owns Gucci, Balenciaga and Alexander McQueen — purchased the retail portion of 715-717 Fifth Avenue from Jeff Sutton and SL Green for $963 million. Before that, Italy-based fashion brand Prada agreed to purchase 724 Fifth Avenue for $425 million, also from Sutton.

Barnett is planning a 193,000-square-foot building at 655 Madison Avenue that will include 62 residential units. Extell purchased the property in October for nearly $160 million from Williams Equities.

— Holden Walter-Warner