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Already this year, billionaire retail mogul Jeff Sutton has sold four prime retail properties for just under $2 billion.
Famously reclusive, Sutton (who declined to be interviewed by The Post for this story), the founder of Wharton Properties, is perhaps the city’s most powerful investor in retail buildings in Manhattan with roughly 120 properties. For decades, he had been a net buyer and rarely a seller.
Now, he’s making moves.
After a whirlwind visit to Italy earlier this year, Sutton closed a deal with Italian fashion powerhouse Prada in 19 days with a handshake and a transfer of funds. Then he closed a deal in a similar fashion with French rival Kering in 28 days. There were no contracts, no deposits and the deals went straight to closing.
At the finish line, Paris-based Kering, the parent company of Gucci and Saint Laurent, paid $963 million for 115,000 square feet in the base of 717 Fifth Ave., while Prada bought both 720 Fifth and the adjacent building that held its store and offices at 724 Fifth Ave. for $835 million, mere months after Sutton sold the retail space at 747 Madison to Dyson for $135 million.
Sutton’s strategy through the years was to control the supply of the “micro markets” within the top retail streets, to shift the supply-and-demand curve towards the owners. As an example of this, he purchased three of the eight coveted corners along Fifth Avenue, between 56th and 57th streets: 720 Fifth, the Crown Building at 730 Fifth and 717 Fifth.
Four of the other corners were already owned by their tenants: Bergdorf Goodman, Tiffany, Louis Vuitton and Harry Winston. The other non-Sutton corner was on a long-term lease to Kering’s brand, Gucci, at Trump Tower at 725 Fifth Ave.
In 2016, Sutton rented one of his Crown Building corners at West 57th Street to Bulgari for a whopping rent of $5,500 per foot, reinforcing his belief that controlling a scarce commodity would eventually pay big dividends. But looking into the future, Sutton sold floors four through 26 in the Crown Building to billionaire Vlad Doronin who would transform it into the luxurious Aman Hotel and Residences there.
The Post discovered that was because Sutton had been planning to redevelop his two adjacent Fifth Avenue buildings at 720 and 724 into a luxury tower designed by Bjarke Ingels with Central Park views that would use the Aman name and amenities. Those plans are now unlikely to be realized.
All of these deals represent a solution to high mortgage interest rates, weakened capital markets that impeded the refinancing of maturing mortgages and property taxes that can be as high as retail rents themselves. Sutton’s plan was to target well-capitalized, European retailers and fashion houses that enjoyed lower interest rates on their continent and would have protection from spiraling real estate taxes as Big Apple owner occupiers.