Hermès Relocates HQ to Former Sony Building

550 Madison Ave. before redesign

The Olayan Group chalked up a 71,757-square-foot lease with French luxury design house Hermès at the iconic 550 Madison Ave. building in Midtown Manhattan’s Plaza District. The world-renowned fashion brand will relocate its U.S. headquarters to the 23, 24 and 25th stories of New York City’s youngest landmark tower.

Olayan picked up the 37-story, 800,000-square-foot asset for $1.4 billion in 2016, according to CommercialEdge data. The Chetrit Group sold the property in a transaction backed by a $570 million loan. Under the current ownership, 550 Madison has undergone extensive renovations to accommodate multiple tenants. Slated to open this year, the revamped high-rise is targeting both LEED Platinum and WELL Gold certifications.

Last November, Olayan inked one of the largest Manhattan leases of the year at 550 Madison. Property and casualty insurance company Chubb committed to 240,000 square feet and 10 full stories at the location. Last September, the asking rate for 550 Madison Ave.’s office space was $210 per square foot, the highest listing across all major U.S. markets.

Intensive renovations

The iconic “Chippendale” building was designed by Philip Johnson and John Burgee as a single-tenant property. Since its opening in 1984, the tower served as home to AT&T and later Sony. In 2018, the postmodern building became the city’s youngest landmark.

The revamped property will offer 14-foot ceiling heights and column-free floorplates. The overhaul will include new amenities, such as food and beverage options and shared conference rooms, in addition to fitness and wellness facilities. Since the beginning of the pandemic, numerous office landlords in Manhattan have embarked on renovating their outdated assets, as difficult market conditions have been pressuring building owners to upgrade their offerings.

The borough’s vacancy rate climbed gradually through 2021, to reach an all-year high of 12.8 percent in December, according to CommercialEdge. In January, the Plaza District recorded an average vacancy rate of 13.4 percent, surpassing the market’s average by 60 basis points.