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ichael Kors has secured a significant lease deal at 667 Madison Avenue, doubling its footprint to 11,000 square feet. The retailer will pay an effective rent of $438 per square foot, a 49% decrease from the previous rate of $862 per square foot. This new deal is part of a larger trend in the Plaza District, where retail rents have declined by 36% since 2016.

    The building's owner, Hartz Mountain Industries, has seen occupancy rates improve to 84%, but net cash flow remains a concern after declining 64% last year. As a result, credit rating agency KBRA downgraded a AAA security holding the building's mortgage, citing the Michael Kors deal as a reason for marking it a "loan of concern." Hartz Mountain also faces a $254 million loan coming due in two years.

    Hartz Mountain chief Leonard Stern has stated that he will pay off the loan and continue owning the 25-story, 265,000-square-foot building if he can't refinance it. The retail market on Madison Avenue remains competitive, with a 14% availability rate in the third quarter, down from 19% a year earlier.