RAPAPORT... Tiffany & Co.'s Manhattan headquarters have been spread across three separate locations, but to generate operational savings, the company will consolidate space during the second quarter of 2011, when it will house staff at 200 Fifth Avenue at 23rd Street. Tiffany will sublease existing properties through 2015, the end of its lease terms, but expects to recover only a portion of its rent obligations due to the current state of real estate in New York City. Tiffany  anticipates recording expenses of approximately $30 million in the fiscal year that ends on January 31, 2012 due to those irreversible lease obligations.

Additionally, Tiffany will incur expenses of approximately $20 million in the fiscal year that ends on January 31, 2011 and $5 million in the fiscal year that ends on January 31, 2012; these expenses are associated with the acceleration of property and equipment depreciation and incremental rents incurred during the transition period. Changes in market conditions may also affect the total expenses that are ultimately recorded. After its relocation is completed, the company estimates that it will generate approximately $125 million during its lease period, which expires in 2026. These estimates are based on current rental costs and assumptions regarding future potential rent increases at the existing locations.

Michael J. Kowalski, Tiffany's chairman, said that it was an excellent opportunity to lock in long-term occupancy savings and gain efficiencies from housing everyone in one location. 

"We are also pleased that the renovated 200 Fifth Avenue building, which recently celebrated its centennial, is expected to be designated a green office building that is LEED-certified [Leadership in Energy and Environmental Design] for its environmental and energy efficient features, consistent with Tiffany's corporate sustainability philosophy," Kowalski added.