Gap is getting ready to move out of its massive store on Fifth Avenue in New York, as the apparel retailer recently said it's considering shuttering hundreds of locations "aggressively" to focus on higher-performing shops.
The three-level Gap store at 680 Fifth Ave. will close Jan. 20, a company spokeswoman told CNBC. The company declined to comment on the reason for this particular closure.
The news comes as retail rents in Manhattan have been climbing over the past few years, with landlords unwilling to negotiate with tenants, but more recently rents have started to cool off.
As far back as three years ago, industry observers were saying rents for retail space in New York had reached "unsustainable" levels, according to the Real Estate Board of New York. But this fall, average asking rents dropped in 15 of 17 of Manhattan's most prominent corridors, REBNY said in its biannual report.
The portion of upper Fifth Avenue between 49th and 59th streets in midtown — where the Gap store sits — saw rents drop 24 percent this fall, REBNY said, putting the average asking rent at $2,973 per square foot.
Value retailer Five Below opened its first store in Manhattan last month, right down the road from Gap on Fifth Avenue. It was a sign, real estate analysts told CNBC, that rents were starting to drop and would prompt a new wave of retailers to move into what had started to become a sea of vacant spaces.
A handful of specialty retailers, including Gap, have recently said they will take a more active approach to managing their real estate portfolios by closing stores or negotiating rent reductions where it makes sense. But the news hasn't sounded alarm bells among the retail real estate community. At a recent ICSC conference in New York, the largest on the East Coast, many landlords told CNBC they expected fewer store closures across the U.S. in 2019 compared with the prior year.
News of the Gap store closure was first reported Tuesday by the New York Post.
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