Gucci Extends Lease in Trump Tower

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Gucci Extends Lease in Trump Tower

On the day President Biden and Vice President Kamala Harris were inaugurated in Washington, DC, Melania and Donald Trump stepped off Air Force One in South Florida to reach the borders of the Mar-a-Lago Club in Palm Beach .

He wore a typical box-shaped suit of undetermined origin. She wore an orange-and-blue boldly patterned Gucci caftan valued at $ 3,700, which was as symbolic as the famous "I really don't care, you do" jacket that she wore on a trip to children in 2018 visiting a border prison in Texas.

With its laid-back lines and orange hexagons reminiscent of a David Hicks rug, the new dress telegraphed the idea that Mrs. Trump would take on a new role as a leisure person, seemingly carefree. It was also a global advertisement for a brand that is heavily linked to the Trump business, unwittingly or not.

For the past 14 years, Gucci has leased 48,667 feet at the base of Trump Tower in Midtown Manhattan, making it the building's largest commercial tenant.

Other companies that rented space with the Trumps have reduced their space or not extended their leases. One of them is Nike, which in 2018 closed its Niketown location at 6 East 57th Street – a building around the corner from Trump Tower for which the Trump Organization has signed a 100-year long lease – and opened a new flagship, the so-called House of Innovation, five blocks south. (A Nike spokeswoman then declined to reach out to Forbes about whether the move was political.)

In 2019, the Industrial and Commercial Bank of China reduced its presence in Trump Tower. Tiffany, who temporarily took over the Niketown space in 2018 while her flagship was under renovation, is not extending its lease next year, Bloomberg recently reported.

But in 2020 Gucci renegotiated and renewed its lease, according to two people knowledgeable about the deal who both asked not to use their names because they are not authorized to speak about it.

The luxury company received a rent reduction in return for agreeing to extend its lease beyond 2026. Trump Tower had to keep an extremely desirable tenant: a brand that has been booming since designer Alessandro Michele took over creative direction in 2015, whose presence in the building helps counter the idea that its namesake is nothing more than the idea of ​​a “poor person from a rich person, ”as Fran Lebowitz said.

However, the players involved do not speak about it publicly.

Four days after receiving a detailed list of questions about the deal, a Gucci representative called and said a statement was on the way within an hour. A little over an hour later the agent called back and said the explanation would not come.

The Trump Organization did not respond to two requests for comment.

One possible reason: According to the person who saw the new lease, Gucci asked Trump organization staff to sign confidentiality agreements regarding their terms.

Even so, the deal paid off for the Trumps for reasons beyond symbolism.

Numerous luxury brands occupying prime Manhattan retail space have renegotiated leases during the coronavirus pandemic as pedestrian traffic has decreased. Others simply sublet their space. That's what Ralph Lauren did at its Fifth Avenue location last November, leasing 28,300 square feet to fast fashion retailer Mango for $ 5 million – that's $ 22 million less than what Ralph Lauren paid for it.

In recent years, the revenue from "The Apprentice," Mr. Trump's former reality show on NBC, has dried up. Debt payments across the Trump business are falling due. This has made the retail space in and around Trump Tower a lifeline. Susanne Craig and Russ Buettner wrote in the New York Times in January of last year that this is probably the most reliable and "largest long-term money producer" in his empire.

A 2012 filing with the Securities and Exchange Commission in connection with the Trump Organization's finances described Gucci as a 20-year lease in 2006. Gucci paid $ 384.40 per square foot of rent per month. This equates to an annual base rate of $ 18.7 million and makes up about two-thirds of the total of $ 29.53 million that the Trump Organization makes annually from its commercial tenants there, according to the filing.

Regardless of Gucci's discretion, it is by no means clear that news of the renegotiation could affect sales. The fashion industry tends to be politically liberal, but sometimes business is just business and aesthetics outweigh politics.

Oscar de la Renta jumped between first ladies with diametrically opposed worldviews. James Galanos pledged allegiance to Nancy Reagan despite the catastrophic neglect of AIDS by her husband's government. In 2019, Bernard Arnault, whose company LVMH owns Tiffany, was accompanied by Mr. Trump at a Louis Vuitton factory in Texas and posed for photos with him.

But Mr Trump's divisive behavior, particularly since the pandemic and election began, has fueled the resolve of activists who denounce him. Brands are more sensitive than ever to the threat of boycotts. Companies like Nike and Twitter have joined the Black Lives Matter movement.

Gucci's latest incarnation was more racially inclusive than most high-end fashion brands.

Shortly after Mr. Michele became its lead designer and began shedding a high-profile and self-conscious snobby aesthetic for an ironic, referential style that could perhaps be described as Etsy Luxe, the company ran an advertising campaign with all black models.

But it also failed.

In 2017, the release of a jacket was announced that looked remarkably like one that had been released decades earlier by Dapper Dan, a.k.a. Daniel Day, a black couturier in Harlem. In response, the brand reached out to him, placed him in an ad for his men's tailoring, and worked with him in a luxury boutique.

Soon after, she announced an initiative called Gucci Equilibrium, which in part aimed to improve diversity and inclusion in the company.

But in 2019, Gucci pulled out a $ 890 sweater that was criticized for taking Blackface off the market. And its executive team, along with that of its parent company Kering, continues to be dominated by white men (Kering has a black board member).

Though Gucci's decision to extend the 725 Fifth Avenue lease was made back in January before protesters carrying Confederate flags stormed the Capitol, Trump's 2020 connection with white supremacists was little-known, Kailee Scales said. Ms. Scales is the former executive director of Black Lives Matter Global Network and a principal at ThinkFree Global Strategies, a boutique company that supports brands like Amazon and Sprite with marketing strategies on social justice issues.

“This is a time,” she said, “when brands, organizations and individuals around the world are counting on racial justice and are working to address and dismantle the systems that led us to one of the most terrifying moments in history – murder at." George Floyd. "

As a result, it is "an odd choice" for Gucci to continue to bond closely with a man who "has openly refused to deny white supremacy" and has "built political justice by promoting racist conspiracy theories".

Ms. Scales' opinion was shared by Shannon Coulter, who launched the Grab Your Wallet campaign, which boycotted SoulCycle and New Balance after individuals with stakes in these companies donated significant sums of money to Mr. Trump's campaigns.

In an interview, Ms. Coulter said that she deliberately removed Gucci and Nike from the boycott list. "We were pretty generous knowing they had signed leases before his campaign," she said.

Gucci's decision to extend 2020 was something completely different.

"It's disgusting," she said. “You are essentially doing business with a white supremacist. That is what this decision means. "

Still, few people directly involved with the fashion world seem anxious to address the potential controversy. Editors like Samira Nasr from Harper & # 39; s Bazaar, Nina Garcia from Elle and Anna Wintour from Vogue have positioned themselves as administrators of racial justice. But they also rely on Gucci for advertising. Representatives for All declined to comment. Mr. Day did not respond to a request for comment.

Jeremy O. Harris, the author of "Slave Play", has had a contractual relationship with the house since November 2020. Generally, such arrangements involve wearing a branded clothing in public appearances and keeping it safe afterwards. "I'm very proud of my relationship with them after meeting people and seeing them really listening and trying to change," he said in an interview last Friday. And "while there are few real estate moguls who have risen to become semi-fascist leaders like Trump, as far as I know they are pretty much all deeply compromised people."

Still, Mr. Harris admitted, "this is complicated."

Fortunately, he added, "I really only go to the Wooster Street store."

Ben Protess and Vanessa Friedman contributed to the coverage.

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