Tiffany & Co. to Consolidate in 260,000 SF at 200 Fifth Avenue
- Apr 30, 2010
April 30, 2010
By Barbra Murray, Contributing Editor
Tiffany & Co. just signed a deal to occupy 260,000 square feet of office space in the jewel of a building at 200 Fifth Avenue in Manhattan’s Flatiron District. The new 15-year lease agreement with property owner L&L Holding Co. will allow Tiffany to unite employees at the company’s three headquarters locations under one roof.
Formerly known as the International Toy Center, the approximately 800,000-square-foot building at 200 Fifth recently emerged from a massive makeover at the hands of L&L, which acquired the century-old property from Arbor Realty Trust Inc. in 2007 for $400 million. Tiffany shopped around for a new space before it selected 200 Fifth with the help of real estate services firm Studley.
One of the features that attracted the company to the property was its LEED certification. “Sustainability is an important part of our culture,” Mark L. Aaron, Tiffany Vice President of Investor Relations, told CPE.
The company’s motivations for finding a new headquarters are twofold, but essentially boil down to economics, he said. “Number one, we wanted to take advantage of the real estate market and get an attractive lease, and two, consolidation is more efficient from an organizational perspective.”
As for its current and future square footage, Aaron noted that attempting to classify the move as an expansion or a downsizing is complicated, as the company reduced its total staff–in the U.S. and abroad–last year by about 10 percent due to the global recession, and most of the layoffs involved the U.S. management team. Alas, its headquarters space requirements aren’t what they once were.
Tiffany plans to settle into its new home at 200 Fifth in spring 2011, but until then, the retail jeweler will be working diligently to find occupants for its current digs, where the last of the three leases will not expire until the end of 2015. However, well aware of the challenges presented by the lackluster office market, the company has no illusions about successfully subleasing every square foot of space.
“We’re making the assumption that what we sublease will be less than what we have,” Aaron said. “We expect to recover only a portion of our rent obligations.”
But any loss due to vacant space may very well be worth it in the end. The company anticipates that, by the time the new lease at 200 Fifth expires in 2026, it will have saved $125 million in leasing expenses.