Saks narrows search to sites in Md., N.J.

November 17, 1994|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Saks Fifth Avenue has narrowed its search for an East Coast distribution center to sites in Maryland and New Jersey and could make a decision on the $25 million project as early as today, sources familiar with the process said.

Executives of the New York-based department store retailer, which has been seeking a location for the operation that would initially create 400 jobs, plan to meet this morning for a final site selection analysis.

State officials estimate the Saks' facility would provide Maryland with a $250 million economic impact through the year 2009.

"We're continuing to evaluate all of our options," said Jaqui LiVidini, a Saks spokeswoman.

Saks initiated the search for the potential 550,000-square-foot distribution center in July, as part of a $350 million strategic expansion plan that could result in a doubling of its stores and establish critical infrastructure for a push into Mexico.

Saks, a 70-year-old retailer purchased for $1.6 billion in 1990 by London-based Investcorp, also intends to augment its recently created Clearinghouse discount stores division and its catalog business. The company currently operates 55 stores in 22 states.

Saks' Maryland search is focused primarily on two 35-acre sites in Harford County, which is already home to a bevy of major distributors such as the Gap Inc. and Frito-Lay Inc.

The company's preferred New Jersey location is roughly 15 miles from Princeton, along the New Jersey Turnpike. The new distribution center -- tentatively scheduled to open by November 1995 -- will eventually supplant a 500,000-square-foot operation in Yonkers, N.Y.

Late last month, Saks selected the Constellation Real Estate Group Inc., which controls an estimated $400 million real estate portfolio, as its developer in Maryland.

"It's a complex evaluation, because it's not just a real estate decision," said J. Richard Uhlig, a Constellation senior vice president. "The decision also involves distribution costs, retail trends and their own expansion plans."

Constellation has offered to develop and own the Saks distribution center, contingent on a lease through the year 2009 valued at more than $27 million, sources said.

For Maryland, Saks would provide a crucial psychological victory in the wake of a decision by Seattle-based Starbucks Corp. in August to develop a potential 1 million-square-foot manufacturing and distribution center in York County, Pa. That project is slated to create more than 250 jobs.

"We have done everything conceivable," said state Department of Economic and Employment Development Secretary Mark L. Wasserman. "Saks has received a full-court press. There's no doubt in my mind that in regards to incentives, Maryland is at parity or better than New Jersey."

Saks is said to favor Maryland's strong and relatively inexpensive labor pool and the presence of distribution centers occupied by Woodward & Lothrop Inc. and the May Department Stores Co. New Jersey is given the edge in its air freight capabilities and proximity to Saks' flagship 615,000-square-foot store, which accounts for about 25 percent of its $1.4 billion in annual sales.

Saks plans to combine the distribution operation with a significant mail-order business component, a move that would create a vast number of office jobs. In all, the center is expected to contain 40,000 square feet of office space.

Saks' site recommendation is expected to go before the company's board for a vote early next month, sources said.

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