Challenge

Cardinal Healthcare Financial Services occupied 100,000 square feet in a project where they had initially leased less than 10,000 square feet fifteen (15) years previously. Although the buildings were well built and designed, the method and manner in which Cardinal had continued to grow had resulted in an inefficient design and mechanical systems. REA was retained as the Tenant Representative and Project Services Implementation Provider for the purpose of securing a lease in a property that best met Cardinal’s needs at the most competitive economics available. Upon securing this assignment, we solicited and received a renewal proposal from the existing Landlord and completed an analysis of the cost to move. The Landlord provided a market rental rate and the cost to move was determined to be the equivalent to approximately seven months of rent.

Solutions

After identifying eight existing and build-to-suit locations, we initiated our Nine Step Tenant Representation and Project Services Implementation Process. Through this process we were able to negotiate a very aggressive lease rate in a build-to-suit project that would require 20% less square footage than the existing project due to having the project designed specifically for Cardinal’s needs.

Results

Upon completion of the economic package for relocation, we shared with the existing Landlord the economics being offered through the relocation opportunity and helped the Landlord develop a financial proforma on the cost of re-tenanting the building if Cardinal relocated. Based upon the strength of these two analyses, we were able to get the Landlord to lower his rental rate by over 30% and agree to a number of tenant improvements including a major overhaul of the HVAC system. Cardinal ultimately renewed the lease at an annual cost substantially less than the relocation alternative, did not have the cost and disruption of a move, and were able to occupy a more efficient and comfortable updated space.