Our client, a manufacturer and distributer of rail car components, had a looming lease expiration on two buildings totaling 115,000 square feet. In addition to the challenges associated with unprecedented demand and limited supply of industrial space in the Chicago metro market, the client was facing the costly endeavor of relocating its complex operation. Remaining in their current location was their priority.
The building’s owner, armed with its own knowledge on the landlord favorable market conditions and the significant costs that moving would present, worked to leverage the situation in their favor by presenting a huge 6.5% rental increase on one facility and an even larger 15.8% increase on the second. Not willing to yield to these demands, the TMG team put our MTS (Maximizing Tenant Strengths) process into action. First, we evaluated and toured alternative locations. Next, we issued RFPs to the owners of those facilities. With strong proposals from alternative locations in hand, we made it clear to the current landlord and the market that our client was in fact willing to relocate.
By leveraging the new options, we were able to negotiate substantial decreases in rent. In fact, we negotiated a free rent provision that effectively decreased the first year’s renewal below their existing rate. We also negotiated several landlord improvements paid by the landlord including power upgrades, office enhancements, and loading equipment updates.
If you would like to learn more about this transaction and our MTS process, please reach out to Rob Prioletti or Dan Smolensky for more information.
Rob Prioletti Dan Smolensky, SIOR