Case Study - Advent Software, Inc.
Challenge
- Advent Software, a publicly traded financial software company, occupied 155,000 RSF in three different buildings in San Francisco's South of Market area.
- The multiple locations resulted in difficult work flow and communication issues.
- There were limited future growth opportunities for the company within the three buildings.
Approach
- Advent Software, a publicly traded financial software company, occupied 155,000 RSF in three different buildings in San Francisco's South of Market area.
- The multiple locations resulted in difficult work flow and communication issues.
- There were limited future growth opportunities for the company within the three buildings.
Solutions
- We located a single building South of Market that would allow for consolidation of the entire staff and accommodate growth up to 200,000 RSF in the same building.
- We subleased 2 of the 3 buildings occupied by the client.
- We exercised the right to terminate the lease in the third building.
Results
- Advent entered a 10 year lease, with an initial commitment of 110,000 RSF.
- Rent at the new location was 25% below the rent at the existing buildings.
- Secured expansion rights on the entirety of the 200,000 RSF building, as well as options to extend, contract, terminate, and purchase.
- The new facility provided a consistent look throughout, a better work environment, and state-of- the-art conferencing and server facilities.
- Since occupancy, Advent has expanded multiple times to a current total of 160,000 sq.ft.
Case Study - Cal First
Challenge
CalFirst Bancor
- p, a major tenant, occupied 48,000 RSF in a Class A office building in Irvine in November of 2007.
- They had a custom build-out with interconnecting stairs and rooftop signage.
- Their lease term had eighteen (18) months remaining.
- The landlord was pressing CalFirst Bancorp to renegotiate its lease immediately.
- The Irvine office market had significant vacancies (4,000,000 RSF vacant) with further deterioration in progress.
Approach
- Allow the market to continue its downward spiral.
- Allow more of CalFirst's remaining lease term to expire, creating more potential relocation opportunities for the bank.
- Create competition for the exisiting landlord by reviewing and negotiating with other landlords anxious to secure CalFirst Bancorp as a tenant.
Solutions
- Negotiated to an agreed upon letter of intent with the current landlord before searching the market for alternatives.
- After 7 months of negotiations, the landlord reneged on the letter of intent.
- We then investigated 32 potential relocation options and negotiated full terms at another Class A office building.
- The prospective landlord provided complete improvements and new furniture at no cost to the client.
- We then approached the existing landlord stating the client planned to sign a lease on the proposed relocation site within 24 hours.
- We proposed terms and conditions to the existing landlord which would enable them to retain CalFirst Bancorp.
Results
- The existing landlord made significant consessions almost immediately. CalFirst Bancorp subsequently executed a lease at its current building on terms which generated $600,000 in savings over the terms previously agreed upon, on which the landlord had renegged.
- The new lease is the low watermark for any lease in a Class A office building in the Orange County Airport Area over the last five (5) years.
- Landlord granted tenant the first seven (7) months of rent free. Half-rent for months eight (8) through forty-six (46) of the lease term.
- The building was named for CALFIRST BANCORP with the appropriate signage rights.
Case Study - Saatchi & Saatchi
Challenge
- Saatchi and Saatchi, a global advertising agency, occupied 106,000 RSF which included the entire 2nd through 5th floors plus several portions of 1st floor.
- Lease expiration had three-year time frame.
- $54 RSF ($32 over current market rent). Landlord offered to re-negotiate the lease spread over market premium over a new lease term with interest factor, which would be in excess of old lease.
- Building sold two years before end of lease term.
Approach
- Wait until landlord was willing to forego the premium and renegotiate new fair market lease terms.
- Investigate relocation options while negotiating with new landlord, maintaining the competitive process
Solutions
- We continued to sustain leverage with other prospects. The new owners, knowing we were in a competitive process, were finally willing to negotiate a new lease.
- They agreed to "walk away" from the remaining over-market portion of the old lease.
- They agreed to a greatly reduced rent, including all the flexibility features suitable for new leases.
Results
- 106,100 RSF
- Terms were retroactive with initial rent of $24.60 RSF, resulting in a savings of $30 per RSF per year through end of lease term.
- Signed fifteen year (15) lease term.
- Option to Terminate within multiple months.
- 10 Year Option to Extend.
- Swing space.
- $500,000 in lobby work redesign.
- Work Allowance $45.00 RSF.
- Several months free rent.
- Signage rights.
- New low occupancy cost on a flexible basis for the long term.
- Building to be named Saatchi and Saatchi with appropriate signage rights.
- TOTAL SAVINGS:
Three million dollar ($3,000,000) savings.
Case Study - Psomas
Challenge
- Psomas, a leading consulting engineering firm, occupied 32,000 RSF (40%) of Class B office building.
- Tenant specific bulidout.
- Lease expiration 2009.
- Free parking.
- Occupied building for 23 years.
- Lease rate substantially below present market.
- Property sold in 2007.
Approach
- New owners of buildng began pressing for new lease in the ensuing months promising a market deal.
- Present market was overbuilt (4.5 million available square feet), negative absorption, transaction volume at a low and market continuing to weaken.
- Recommended Psomas delay negotiations until a later date and leverage the downturn to their advantage.
- Proceeded to investigate relocation options and maintained a time frame which would enable us to negotiate and relocate, if necessary.
- Initiated a comprehensive site selection process which garnered potential possibilities.
Solutions
- The landlord waited to respond to our counterproposals hoping to limit our ability to relocate..
- At this point, the market was rapidly eroding. Their final proposal was at a premium to market.
- My orders were to strike a deal at the same lease rate as their existing lease, including all tenant work.
Results
- Property was located in which a major institution owner would be able to backfill 49% of space that had become vacant three (3) months earlier, taking advantage of lease-up budget.
- Tenant upgraded their Class B, 32,000 RSF office space (occupying two floors) to a Class A, 32,000 RSF office space..
- Transaction was neutral. Landlord's net rent received only paid their operating costs after allocation for and landlord's out-of-pocket expenses.
- New lease transaction was the same economic terms as prior lease. New low watermark for a Class A office transaction in Orange County area.
- No out-of-pocket capital expense.
- Top of building signage (fronting on freeway).
- All parking free for lease term.
- Long term lease.