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Experiencing severe side effects of the economy-crushing COVID lockdown along with civil unrest in New York City, high-fashion brand Valentino wants out immediately of its lease on Manhattan’s prestigious, or perhaps once prestigious, Fifth Avenue.
Commerce in all sectors is trying to recover from business shutdowns that in particular have been most restrictive in the city and state of New York under Democrats Bill de Blasio and Andrew Cuomo, respectively.
It is often said that real estate derives its value from location, location, location. Valentino has apparently concluded that the four-story retail boutique located on 54th Street, two blocks south of Trump Tower, is no longer in a luxury shopping destination for locals and visitors and is suing to get out from under its lease.
Given the lack of foot traffic in the area that is also home to design brands Versace, Gucci, and Louis Vuitton. in part due to slumping tourism, other brick-and-motor retailers in the general area, such as Victoria’s Secret, are similarly going to court to invalidate their rental agreements.
The area is also home to the popular luxury department store Saks Fifth Avenue, which was also boarded up during the protests (see video below).
(Source: Daily Mail)
When it originally inked the lease in 2013, Valentino — a brand founded by fashion designer Valentino Clemente Ludovico Garavani — may have been paying on average $2,512 per square foot.
In legal papers, Valentino attempted to justify its basis for terminating the lease, the Daily Mail reported.
“In the current social and economic climate, filled with COVID-19-related restrictions, social distancing measures, a lack of consumer confidence and a prevailing fear of patronizing, in-person, ‘non-essential’ luxury retail boutiques, Valentino’s business at the premises has been substantially hindered and rendered impractical, unfeasible and no longer workable.”
Nor does Valentino apparently expect the situation to improve “even in a post-pandemic New York City (should such a day arrive).”
In its legal action, the Italian label is also apparently relying on a lease provision about the retail space being “consistent with the luxury, prestigious, high-quality reputation of the immediate Fifth Avenue neighborhood” and thus it is no longer equipped for this purpose.
In general, a material change in conditions could be the basis of ending a contract under some circumstances, but it remains to be seen how this particular controversy — with big bucks on the line — will play out in court or if the parties can reach an out-of-court settlement, now that an actual lawsuit has brought this matter into more intense focus.
“Restrictions have affected Valentino’s ability to offer fitting services or to sell its clothes, shoes and accessories in the store, according to the lawsuit,” Fox Business explained about the lockdown.
“At the start of June, retailers including Valentino, had boarded up their stores with plywood to prevent looters from damaging the stores and their inventory. With fewer instances of unrest, Valentino has since taken down the plywood that has been protecting its facade and has been open for curbside pickup for items such as purses for $1,195 and $495 T-shirts,” Fox Business added.
The attorney for the landlord implied that he plans to respond in court rather than through the media. Apparently the landlord’s lawyer has already rejected Valentino’s attempt to surrender the lease.
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