My team and I recently finished helping a home housewares client restructure their headquarters lease. The project presented some unique opportunities and challenges based on the nature of the business, the average employee tenure, and conditions in the market.
The client has been enjoying exponential growth over the past five years. Despite the economy, they have seen a 20% increase in sales during that time, and the board has continued to expect these results. Management recognized that in order to continue at this pace, there would have to be significant investments into the brand, attracting talented new employees, while also retaining critical staff. The current facility had been occupied in its existing configuration for almost twenty years. The layout, finishes, and environment no longer fit with the company culture and mission going forward.
DTZ was engaged to assist with addressing a number of these issues and leveraging the real estate to make a positive impact on the organization going forward. The team started with a comprehensive space study to evaluate current space utilization while also creating a vision of what the organization would look like at specific points over the next decade. The research department completed a deep-dive into employee demographics to help focus the geographic search. This identified where new employees would be recruited from while also minimizing the impact on existing staff. Finally the brokerage team completed a comprehensive market search and considered all building classes and configurations to create leverage in negotiations with both relocation alternatives and the existing landlord.
When the project was completed, the team decided that renewing and restructuring the existing lease would provide the most ideal combination of cost savings while also minimizing impact on the existing staff. The final results of the project included:
• Achieving a 26% reduction in rent that took effect a full year before the existing lease expired.
• Significant work letter from the landlord to complete space reconfiguration
• Creating a dynamic work environment to attract new employees while also maintaining stability for existing employee base
• Landlord funded upgrades to the base building, including the roof, bathrooms, and building façade.