Case Studies & Best Practices
The client is Westchester County’s largest law firm, and occupied 133,000 SF of space with about 4 years left on its lease in an older suburban building with no amenities. It had grown from an initial occupancy of about 50,000 SF in the building, and had ongoing issues with building maintenance. It was paying an above-market rental, with inefficiencies in its configuration due to the many small expansions over time.
Wilson Elser was in the process of master planning its real estate requirements for the entire New York metro area, consisting of approximately 300,000 SF in Manhattan, White Plains and Long Island. The tenant’s goals were to accomplish a significant upgrade of its facilities, to increase efficiency of its space utilization, and to reduce its occupancy costs.
We began the process in Westchester in early 2010. As the existing Wilson Elser lease did not expire until the end of 2013, it would not have been economically feasible to secure a new space that was vacant at that time for occupancy almost four years in the future.
However, a major local tenant had just committed to relocate its corporate headquarters from Westchester County to Connecticut, which would vacate 325,000 SF in two separate buildings with two different owners in the first quarter of 2012. This gave us an excellent opportunity to leverage our client’s position, notwithstanding the long lead time for its occupancy of new space. We negotiated with the existing building owner and with other building owners, and were able to secure a new lease in a completely refurbished building with a complete amenity package, very close to its existing Westchester location, at a significant savings from the present lease. The new lease was executed at the end of 2011, almost two years after the process began.
Client had leased a 71,500 SF space for a collocation data center, and was 6 1/2 years into a 10 year lease. The tenant wished to expand his space by 16,500 SF, but did not want to do so (and make a significant investment in fitting out the space) unless it knew that it would remain in the facility for a term well in excess of its original lease.
HPL crafted a negotiating strategy that required the building owner to grant an early lease renewal as a condition for the tenant expanding its space. With this basic building block of the transaction in place, we achieved a very early renewal at fixed rent numbers, for a tenant who had invested tens of millions of dollars in construction and equipment in its space. With this level of comfort, the tenant was able to invest in its expansion, knowing that it had a 13 1/2 year term left. We also successfully negotiated for additional renewal rights at the end of the extended term.
Alfa Wassermann US
The tenant was coming to the end of a 50,000 SF full building lease. The building housed its executive and administrative offices, laboratories, light assembly and warehouse functions. While the tenant did not want to go through the expense and disruption of a move, the renewal option in its lease (negotiated by another broker 10 years ago) provided for already above-market rents to continue to escalate throughout a 5 year renewal term.
HPL studied the market in the area and identified another viable building for the tenant. At the same time, we entered into negotiations with the existing landlord. We were able to achieve a rent roll-back for the year left on the original term, plus a 10 year renewal term in which the landlord provided a new roof, a substantial construction allowance for work the tenant required within its space, at rental rates significantly lower than in its original lease.
Software Guidance & Assistance
This provider of permanent and contract IT professionals for financial services firms was located in a small building with a significant amount of medical tenants, which put tremendous pressure on the limited available parking. Its space was old, and the configuration was not ideally suited for its current functions.
HPL placed the tenant in 5,252 SF in a higher-quality building, with a major REIT landlord, at lower rent than its present landlord would have accepted. In addition, the space was delivered completely furnished, including workstations and office furniture, at no additional cost to the tenant. Within six months of its relocation, it required a significant expansion, and we were able to negotiate a fully-furnished expansion space of 2,490 SF at the same rental rates (notwithstanding some strengthening of the leasing market) that it was paying on its original space.
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