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Project Outline
Global Market Insite is a market research firm founded in 1999 in an
apartment on Cougar Mountain. Through a successful strategy of growth
including acquisitions, by 2005 the company’s offices were dispersed
between Mercer Island and Seattle. This workforce separation created
increasing inefficiencies for the employer, as well as an inconsistent
brand image and culture for GMI’s clients, prospects and employees.
As part of a strategic reorganization and branding initiative GMI
targeted a consolidation of its Puget Sound operations into a single
corporate headquarters. GMI asked us to handle the company’s real
estate representation to complete this task. We began with a thorough
assessment of GMI’s needs, a process that included:
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Interviews with executive personnel to
understand the company’s near-term requirements, long-term
objectives, and building criteria necessary to complement the
client’s forward facing image for both employees and customers.
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Alongside the client, interviewing
architectural firms and selecting the best firm matching GMI’s
cultural needs and business strategy.
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Developing a Space Efficiency Template
identifying GMI’s most efficient square footage needs - both at
present and into the future.
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Zip code mapping of employee’s
residences to understand drive times and most optimal mass transit
and ride-share alternatives.
Services Provided
We identified two desirable locations - one in Bellevue and the other in
Seattle. At first glance Seattle appeared to be a very attractive space,
available at a rate substantially under-market. Our deeper research and
financial analysis revealed additional, burdensome costs that our client
would have to absorb, including:
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Required space improvements that would
have to be funded entirely by GMI, including additional build out,
technology infrastructure upgrades, and reception area improvements.
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Complete acquisition of furniture and
fixtures as the advertised existing systems were disparate remnants
of independent acquisitions, inadequate for a cohesive workplace
solution.
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Downtown Seattle parking fees with no
cost controls, in an environment with escalating fees and limited
alternatives.
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A short sublease term that would
require GMI to negotiate a direct lease soon after occupying the
sublease space, at occupancy costs - rent plus parking, upwards of
fifty percent higher than the marketed sublease economics.
After providing the client with a true Cost of Occupancy analysis, shown
as both an upfront fixed cost to occupy, as well as the cost over the
term of the commitment, the client elected to pursue the Bellevue
option.
How We Added Value
As a global market research company, GMI promises to deliver to its
clients all the advantages of cutting-edge technology. The Bellevue
space was originally built-out for a Fortune 500 software company that
spared no expense. Among the qualities that made it a perfect fit for
GMI’s branding, employee morale, and growth objectives were an
extraordinary in-place technology infrastructure ready for use, a
reception area with a jaw-dropping “arrival” factor, and an extremely
efficient office layout with an optimal blend of private offices and
supporting workstation space. All of this would save GMI hundreds of
thousands of dollars in upfront capital; capital that could be used to
grow the business.
After lease negotiations were well underway we became aware that one of
the Eastside’s most aggressively expanding companies was attempting to
enter negotiations on the space. Thanks to our relationship with the
listing broker, we secured his commitment to continue his focus on our
transaction, in exchange for an accelerated completion of the remaining
open business points and legal negotiations.
Because the transaction was a sublease our client would be required to
sublease the space from the existing master tenant. Through discovery we
found the master tenant was on less than ideal financial footing. There
are material implications to a subtenant if the master tenant, during
the sublease term, defaults on their master lease. Most critically - if
the master lease is terminated because of a master tenant default, the
landlord would have no obligation to honor the subtenant’s tenancy. To
protect our client we negotiated an agreement with the landlord to
ensure that, in the event of this occurrence, GMI could enter into a
direct lease with the landlord. This is an extremely unusual concession
for a landlord, but one that we believed was essential for GMI’s
stability, corporate confidence and peace-of-mind.
The final terms were highly advantageous to GMI, including:
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A rent structure well under market,
for the entire duration of the sublease term.
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In-place furniture, fixtures and
technology infrastructure - with an option to purchase for one
dollar ($1.00), saving the client hundreds of thousands of dollars,
all while delivering the improved presence and appeal of an
international company.
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Close to four months of upfront free
rent- roughly a third of a million dollars
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An exceptionally low security deposit,
enabling GMI to offset their moving costs and allocate more capital
to growing the business.
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Outstanding parking ratio at a fixed
cost for the entire sublease term- a rare and valuable asset for the
client.
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Extraordinary space flexibility - both
to expand, through negotiated expansion rights, as well as
consolidation, through favorably negotiated sublease language. The
consolidation allows the client to shed space if necessary for a
sale of the company, thereby mitigating or eliminating any discount
taken for the company’s future real estate obligation. The
expansion would allow the client to be opportunistic for well-timed
acquisitions that could be absorbed into this adjoining space,
thereby avoiding one of the main reasons for the move in the first
place - the drag of multiple real estate locations.
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A “hip and cool” workplace, completely
paid for and at no cost to the client. With GMI’s reliance on a
young and talented workforce, the importance of providing a fun and
cutting edge environment was achieved with no capital investment of
their own.
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“Jason is a pleasure to
work with. He took the time and effort necessary to understand our
company’s unique needs not only in terms of how many square feet we
needed when looking for new space, but also our goal to establish a
new corporate culture and work environment for our employees.
Renewals are easy, relocations are not. By keeping both our fiscal
and cultural goals in mind, Jason was able to pin-point optimal
locations for review and discussion, allowing us to identify a
location in a short time frame and get the deal done.
“I’ve had the opportunity to work
with Jason on multiple transactions varying in size, global
locations and for multiple companies. Consistently, Jason gives the
same level of attention to each transaction, no matter the size or
location. It is this personalization together with his strong
working relationships with landlords and brokers that made Jason a
great asset to my team, turning what can sometimes be an arduous
task into a pleasant experience.”
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