Competing for a permanent home in Manhattan, retailers are racing to buy their storefronts

The city’s flagship retail storefronts are so rare that businesses are opting for the nuclear option – buyout.

Kering and Prada bought their Fifth Avenue stores last year for $835 million and $963 million, respectively. Now, Uniqlo is buying the 100,000 square feet of retail it already occupies at 660 Fifth Ave. from Vornado.

Uniqlo purchased a 17,250-square-foot portion of the retail complex for $350 million. The deal values ​​the space at $20,237 per foot — and gives them a lifetime home.

“Smart retailers are saying before the rent gets out of hand again, let me own it,” said Steven Soutendijk of Cushman & Wakefield. “We have the lowest availability since 2011 or 2012.”

At the base of the new Mandarin Oriental residences at 685 Fifth Ave., brokers at Newmark have been marketing spaces occupied by Coach, Stuart Weitzman and Tag Heuer on behalf of owner Brookfield. Other agents suggest that since LVMH is looking for space on Fifth Avenue, it could make an offer.

“Big fashion houses want the assurance that they will have a fantastic presence in a great corner in perpetuity,” said CBRE’s Matt Chmielecki.

It’s a similar story downtown where Adelaide Polsinelli of Compass has two restaurants and several streetwear brands looking to buy locations in Little Italy and Soho. “Space is limited in Soho and prices are going up,” she said.

Investor Isak Andic’s company bought a 19,000-square-foot store occupied by Cotton On at 512 Broadway (56 Crosby St.) for $26.9 million. Nearby, at 597 Broadway (170 Mercer St.), The Jackson Group paid $6.25 million for a store. Meanwhile, skincare brand Caudalie spent $9.7 million to buy a vacant store at 130 Greene St.

But Ikea’s parent company is really going for it: Not only is it buying 70,000 square feet — likely to house a store — at the base of Extell’s new office tower at 570 Fifth Ave. on W. 47th St., is also investing in the project.

“Investors want to have the ability to collect income from tenants and not just have a vacant space.”

Bernadette Brennan, Commercial Sergeant

“It’s a very strong signal that retailers are sending to New York and the market by committing to New York and spending so much capital to control their real estate,” Soutendijk said.

But it’s not just big fish that devour spaces. Smaller retailers are also buying.

Bernadette Brennan, of Serhant Commercial, sold two small retail apartments at the base of a new residential building at 165 Lexington Ave. on the corner of East 30th Street for nearly $1,400 per foot for owner-occupiers. She has one left to go. “Both were sold to small business owners who wanted to own instead of rent,” Brennan said. “We are seeing a desire for ownership.”

Along with not paying the “exorbitant retail rents in Manhattan,” there are tax advantages to ownership, Brennan said. One of the buyers of the retail condos had sold another property and used the federal tax-free 1031 exchange proceeds to put into the new store.

Religious groups, child care companies, other nonprofits and private schools, which don’t pay real estate taxes, are also in a stronger position to buy space, Polsinelli said.

“I have one on the market where taxes were through the roof and two nonprofit users love it,” Compass’ Polsinelli said. “They can pay more because they don’t have to factor in real estate taxes.”

But the retail shopping spree isn’t just being driven by owner-occupiers.

Investors are also promoting sales of occupied spaces. “Investors want to have the ability to collect income from tenants and not just have a vacant space,” Brennan said.