- Valentino filed a lawsuit against its landlord on Sunday seeking to terminate a 15-year lease on its Fifth Avenue store.
- In the court filing, Valentino said that it was “impossible” to operate its business at the four-story location in the wake of the coronavirus pandemic.
- “Even in a post-pandemic New York City…the social and economic landscapes have been radically altered in a way that has drastically, if not irreparably, hindered Valentino’s ability to conduct high-end retail business at the Premises,” it said.
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Valentino is the latest retailer to be suing its landlord over an expensive Manhattan lease.
The Italian luxury brand filed a lawsuit on Sunday in the Supreme Court of the State of New York seeking to terminate the lease on its four-stroy Fifth Avenue store, alleging that it was “impossible” to do business at this location in the wake of the coronavirus outbreak.
Valentino signed a 15-year lease on the space in 2013.
In the court filing, it pointed to the wording of the lease agreement, which stated that Valentino could use the space “solely and exclusively” for the display and sale of luxury goods.
“All such uses by Tenant to be consistent with the luxury, prestigious, high-quality reputation of the immediate Fifth Avenue neighbourhood (i.e. Fifth Avenue between 59th Street and 50th Street) in general, and for no other use or purposes,” the lease said.
Valentino then went on to point out that under this initial agreement both parties had “clearly understood that the Building’s prime retail location on Fifth Avenue, was a heavily trafficked area, and that it also served a focal point of high-end New York City fashion buyers, and that those factors were the justification for the correspondingly substantial rent paid by Valentino.
“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 patronising, in person, “non-essential” luxury retail boutiques, Valentino’s business at the Premises has been substantially hindered, rendered impractical, unfeasible and no longer workable,” it said.
It continued: “Even in a post-pandemic New York City (should such a day arrive), the social and economic landscapes have been radically altered in a way that has drastically, if not irreparably, hindered Valentino’s ability to conduct high-end retail business at the Premises.
“The very purpose of the Lease, Plaintiff’s ability to use of the Premises to operate a high-end fashion retail boutique along a prestigious section of Fifth Avenue, has been completely frustrated,” it said.
Retailers across the US have been grappling with the impact of the coronavirus pandemic, which kept stores closed for weeks on end and consumers at home. Many retailers have been renegotiating rents with landlords or requesting rent deferral for the months that their stores were closed. Others have simply refused to pay.
Similarly to Valentino, Victoria’s Secret is also in a legal battle with the landlord of its Herald Square location, one of its largest spaces and most expensive leases.
According to Business Insider’s Dan Geigel, the legal argument made by these retailers is centered on “frustration of purpose” or when an unforeseeable event impacts the economics of a deal and can be used to void the agreement.
“Each lease has its own definition of the scenarios that might qualify as an unanticipated adverse change to the economics underpinning the lease,” Matthew Parrott, co-head of Fried Frank’s real estate litigation practice, told Geiger.
“If that language isn’t specifically applicable to the current crisis, it’s going to be really hard to prevail in making these kinds of arguments,” he said.