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Challenge
The client, a London based marketing and
technology services company, was in the early stages of aggressive and
sustainable growth which would require new facilities. Because of the
relatively young age and early revenue ramp of the company, the client
needed to maintain strong fiscal constraints but yet wanted the new
office to be within a quality institutional office product. With the
client’s requirement to recruit, hire, and retain the best talent
possible in a very competitive industry employment pool the office space
would also become a key hiring and retention tool.
Strategy
The strategy was to locate suitable
institutional office grade product that required limited
improvements, yet the space would need to show a strong creative
voice and would therefore become an integral part of the client’s
brand. The ideal space would offer a lively, progressive, and
cutting edge work environment. Jason retained a construction
management consultant to oversee the client’s technology and
infrastructure needs and to assist in negotiating the most cost
effective tenant improvement schedule so that both parties would
minimize their capital contribution. The minimized tenant
improvement contribution would solve two challenges: 1. A reduced
landlord requirement to securitize and underwrite the lease
guarantee and 2. A lower effective occupancy cost. Since the client
was on a month to month lease in its current space, tremendous
leverage could be utilized since any similar sized tenant would need
close to twelve (12) months to relocate. This allowed the client to
provide an attractive near term cash flow proposition to the
landlord.
Result
22,000 square foot new lease at Plaza at
Yarrow Bay, with no out of pocket contribution by the client toward the
tenant improvements. The complex has been home to many successful
technology companies including the initial headquarters for McCaw
Cellular (fka AT&T Wireless), and currently the regional office of BEA
Systems- one of the client’s customers. The client received prominent
building signage visible from SR-520, and capitalized on the enormous
existing infrastructure as a result of the previous high flying
technology company’s occupancy. The rent schedule provided extended free
rent upfront together with a “space pocket” allowing the client to
control a large block of space but only having to pay for what they
actually occupy, thereby mirroring the client’s future revenue stream
with future increased occupancy costs. The security deposit was
artificially low as the level of landlord improvement contribution was
minimal and also provided for a reduction schedule allowing the client
to free up additional working capital over a short period of time. Jason
also recognized the velocity at which the suburban Bellevue class A
office market was consolidating during these negotiations, and knew this
type of product would soon become a limited option. With this knowledge
Jason was able to lock up the deal points and subsequent lease signing
before the landlord raised their rent structure. Six months after the
client’s occupancy, rental rates in the complex had increased more than
$3 per square foot, a savings to the client of $66,000 in the first year
alone.
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”From start to finish Jason made us
feel like we were the only client he had. He not only introduced us
to the best architect on the Eastside but also to the leading
construction management person. Jason then went on to negotiate with
the landlord to pay both of these provider’s costs.
I felt that Jason and his team were
firmly on our side when it came to landlord negotiations and did not
accept what was traditional or expected, but rather what was right
for us. This set them apart from the other brokers we have worked
with.
Jason was also instrumental in the
site selection process. It was clear he had a deep understanding of
the history and nuances of each building and owner. With this he let
us know which owners would be the right fit for us and which we
should hold reservations about.
His negotiation skills and
awareness of the market also proved valuable. Halfway through our
transaction Jason mentioned to me that the Eastside office market
was beginning to get tighter (and provided examples to support
this). We accelerated our negotiations through Jason in order to
lock up the deal points and negotiate the lease.
Only a few months into our lease we
were already well below market with the savings growing every month,
not to mention the first four months of free rent he negotiated.”
Dave Franklin
Regional Vice President |
