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Vornado closes years' largest lease.

In a deal that marks the largest lease signed in Midtown Manhattan this year, Federated Department Stores, Inc. (Federated) has committed to a 15-year, 257,748 square-foot lease with Vornado Realty Trust (Vornado) at 11 Penn Plaza for its Merchandising Group's headquarters.

Representing Federated in negotiations with Vornado was Insignia/ESG's Scott Gottlieb, Michael Laginestra and Kenneth Meyerson. The Insignia/ESG team also represented Federated in negotiations with the City of New York and the State of New York.

Representing building ownership was David Sims and Glen Weiss of Vornado, the largest landlord in the Penn Plaza District, where it owns in excess of 5.5 million square feet of commercial space.

Federated Merchandising Group will expand the space it occupies at 11 Penn Plaza from three floors to five, demonstrating along-term commitment to both Vornado and the Penn Plaza District.

The Insignia/ESG team secured a package of municipal incentives for Federated in return for its commitment to remain in NYC and grow its employee base. The municipal package included energy and sales tax incentives related to retention of Federated's existing workforce and its growth over the next 15 years. Additionally, Federated will receive a capital grant over two years from the State's economic development agency, Empire State Development.

Federated had reviewed alternatives in New York and New Jersey. "After an extensive evaluation of each of the available alternatives, Federated determined that a consolidation of its New York City operations into 11 Penn Plaza met its established criteria. The revitalization of the Penn Station area was a significant factor, as well as the building's amenities and services and incentives offered by New York City and New York State," said Scoff Gottlieb, executive managing director of Insignia/ESG.

"New York is undeniably the world's fashion center, and as such we belong here," said Leonard Marcus, president of Federated Merchandising Group. "Add to that the other business advantages the City and State offer, and we could not find a better location for the merchandising and product development arm of Federated."

Robert Shansky of Jones Day Reavis & Pogue acted as counsel for Federated during negotiations. Vornado was represented by Ronald Sernau and Elise F. Liebowitz of Proskauer, Rose.
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Publication:Real Estate Weekly
Article Type:Brief Article
Geographic Code:1USA
Date:Mar 22, 2000
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