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Tower 49 leases 10 floors to Saks.

A tenant that knows a lot about shopping has procured a major block of space in Tower 49, the 45-story office property at 12 East 49th Street.

Saks Fifth Avenue signed a 15-year lease for 150,000 square feet of office space with Kato Real Estate Corporation, owners of Tower 49. The 10 floors of space will serve as the firm's worldwide headquarters.

The space was formerly occupied by First Boston, which vacated in late 1991. With this lease the building is 98 percent leased.

Saks will be consolidating administrative, buyer and merchandising functions from a number of locations into the second through 11th floors.

The retailer will leave its space on West 15th Street, with the office activities moving to Tower 49, warehouse and shipping moving to Yonkers and the alterations department locating to the 10th floor of the flagship store. Saks will also move out of 26,000 square feet at 600 Fifth Avenue. The store will move office functions currently occupying the ground floor in its flagship retail store to Tower 49. The excess space in the flagship store will he used to expand customer services.

Helmsley-Spear, Inc. was the sole broker in the transaction. Joseph McCluskey, senior vice President, led the leasing team, assisted by Alan Goldberg and Robert Seidenberg, vice presidents, and Robert Bakst. The team will be responsible for sub-subleasing Sak's 26,000 square feet at 600 Fifth Avenue.

Helmsley-Spear also represented Kato in the purchase of Tower 49 from Solstead Associates, the developer, in 1986. The brokerage currently serves as exclusive agent for the building.

Natural Customer

While there will be some tenant work, McCluskey said, the space already contains many elements that will be of use to the retailer, which will house between 600 and 700 employees in the space and host visiting buyers and wholesalers.

The third floor contains audio-visual and auditorium facilities formerly used by First Boston for training and there is cafeteria. And, since First Boston used part of the space for its MIS and software development, there is significant computer cabling.

Those conditions, combined with the building's location just off Fifth Avenue, McCluskey said, led them to court Saks.

"They were a natural customer for us," said McCluskey.

While the deal took a little more than a year to structure, McCluskey said, once Saks made its decision to consolidate into the building, closing occurred within 30 days.

Unlike the recent Prudential lease, Goldberg and McCluskey said, the lease saved between 600 and 700 jobs without any help from the city.

"It's good for New York," McCluskey said "They could have moved these functions out of the city to New Jersey of Yonkers.

Saks' parent, Investcorp, is a partner in its own office tower, Swissbank Tower, which rises over the flagship store. But according to a spokesperson for the building's leasing agent, Swissbank Tower was not a possibility for the consolidation because it is 96 percent leased.

Peter Figdor, Esq., of Marks and Murase, represented Kato as attorney, and Kenneth Oltarsh, Esq. of Hall, Dickler, Lawler, Kent & Friedman represented the tenant.

The Helmsley brokers could not reveal the rent Saks will pay, but they said it is better than $30 per square foot.

The move into Tower 49 is expected to be completed by Jan. 1, 1993.
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Title Annotation:office property at 12 East 49th St., New York, New York
Publication:Real Estate Weekly
Date:Aug 19, 1992
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