As one big Fifth Avenue spot gets filled, another one looks like it will be opening up so. Diesel has reportedly signed a deal to take over 4,400 square feet of space including the Baccarat store at 625 Madison Avenue across from the rear side of the GM building. The new store's neighbors will include Fratelli Rosetti, Stuart Weitzman and Philipp Plein.
Presumably, that means that the Italian denim brand will be abandoning the Fifth Avenue flagship it opened only six years ago in the former longtime home of Gucci (pictured left). Since most retail leases these days start at about 10 years, we can only speculate as to why a, presumably healthy, major international brand like Diesel would abandon a lavish, high profile store right in the middle of Fifth Avenue's tourist-rich sweet spot before its lease is up? Have rents on Fifth inflated so much in the past couple of years that Diesel's landlord was willing to buy them out in order to make way for a new tenant willing to pay even more? At $1,400 a square foot, Diesel's rent on Madison for a 10 year lease is reportedly an 83% increase over what Baccarat paid.
We know, it's insane, but it still might be less than what Fifth Avenue demands.
The other question is why Diesel would move to Madison at all?
While Fifth has become a peculiar free-for-all mix between longtime pure luxury players like Bergdorf Goodman, Tiffany and Cartier, newer brand palaces like Prada, Dolce & Gabbana and Armani and mass market mega-flagships like Gap, H&M, Uniqlo and soon, Forever 21, Madison has remained an enclave of almost exclusively the highest-end boutiques and jewelers. Some luxury brands like Amani, Bottega Veneta, Valentino and Prada maintain a presence on both streets to show off for tourists on Fifth and serve more exclusive, crowd averse clients on Madison. Diesel, as upscale as it may be, doesn't really fit that mold. There must have been some reason why the jeans giant was compelled to leave what would seem to be the perfect spot for one that is good, but maybe not quite as good. Maybe 625 Madison offers a more favorable selling space, or perhaps it was just financially more viable? We may never know for sure, but we can count on the new store to be something of an update for the brand. We have no opening date yet, but expect it to reflect Diesel's retail evolution under its recently installed creative director, Nicola Formichetti. Stay tuned.
SL Green Secures Dramatic Rent Increase in Diesel Deal (Commercial Observer)