Chase Manhattan Corp. will lease about one million square feet of its building at the southern tip of Manhattan to a unit of Prudential Insurance Company of America.

The bank, which took an option to buy the 2.4 million square foot building in 1989, has reached an agreement in principal under which Prudential would pay about $250 million through the year 2114 to lease the space.

The tenant would also be responsible for taxes and operating expenses.

Headache Avoided

With the weak market for commercial space in New York, the lease relieves a potential headache for Chase, which will vacate its offices in the building by December.

Including Prudential, Chase has arranged to lease 1.6 million square feet so far, meaning it still seeks tenants for about 800,000 square feet, said Victor Castellano, a vice president of the bank.

Prudential disclosed the lease when officials were announcing that the insurer's massive Times Square development was being put on hold, due to the lack of demand for new office space. But the company said the two circumstances were unrelated.

Mr. Castellano said that the bank had been negotiating with Prudential for about eight months.

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