In every significant commercial real estate transaction, there are challenges and hurdles to overcome. However, a company “going it alone” on a relocation or renewal can end up leaving money on the table… the landlord’s table, that is.

In the case studies that follow, we’ll show how we have helped our customers to overcome these obstacles and turn daunting challenges into strategic wins.

Jordache, currently occupying 67,865 square feet at 1400 Broadway, is a well-known mutli-faceted enterprise comprised of businesses ranging from real estate and hospitality to fashion and aviation.

In June 2011, the company was faced with a rising market where buildings in their vicinity were commanding rents of $48.00 per square foot or above. At the same time, their existing space was inefficient as they were spread out over three non-contiguous floors. We were hired by Jordache two years before their lease expiration to simultaneously negotiate their renewal and negotiate alternatives in the marketplace.

After surveying the market and identifying several options, we submitted offers to three buildings within a four block radius including 1407 Broadway, 1370 Broadway and 1372 Broadway (a long term sublease from Walmart). After extensive negotiations, 1372 Broadway came back with the most aggressive offer out of the three buildings with a starting base rent below $40.00 per square foot, a full work allowance and a substantial free rent package. Not only did we leverage the Walmart offer against ownership at 1400 Broadway but we demonstrated the tremendous value of maintaining Jordache’s tenancy. If Jordache decided to leave the building, we explained, all of their space would have to be demolished and ownership would have to supply a new tenant with a full building installation and a market free rent package which would total over $6,000,000. Not to mention the vacancy rate in the building would spike significantly.

We were able to negotiate the landlord down to a deal $10.00 below the market, one year before the lease came due while securing ten (10) months of free rent and $37.25 per square foot in cash to improve the space which was already in good condition. We were also successful in changing Jordache’s rent escalation from a Consumer Price Index (CPI) to a direct operation escalation which will end up saving the company approximately $4,000,000 over the ten-year term.

In the end, we were able to negotiate a huge concession package equal to 22 months of rent (an approx. $4.7 million value) and $38.00 per square foot compared to the Landlord’s initial “best and final offer” of $48.00 per square foot and seven (7) months of free rent.

T3 Capital, a 25,000-square-foot trading operation formerly at 100 William Street had been trying to negotiate a renewal with the ownership’s agents CBRE. When we had met with them, their last proposal from the owner was a seven year team averaging $49.00 per square foot. Since T3 Capital and the Landlord were at a stalemate, we were hired as their exclusive broker to negotiate on their behalf.

We immediately showed them other prospective properties priced 20% less than 100 William Street, while simultaneously submitting low-ball (but appropriate) offers for the space at their current building. After touring approximately 20 different properties, we narrowed our choices to three buildings: 100 Church, 1 State Street Plaza and 100 William Street all of which were represented by CBRE as the Landlord’s agent.

T3 Capital loved 1 State Street Plaza, however the asking price was $46.00 per square foot which was significantly higher than their budget while 100 Church was $36.00 per square foot. We essentially used 100 Church and 100 William Street as bait to drive the price down at 1 State Street Plaza even though CBRE had represented all three properties.

Had T3 Capital hired CBRE as its tenant representative it would not have been able to achieve the incredible numbers shown below. At the time of these negotiations 100 Church Street had a large block of space available so the owner was eager to make a deal, however, T3 Capital much preferred 1 State Street Plaza. The tenant visited 1 State Street Plaza 15-20 times (versus just 2-3 visits to 100 Church Street) and had CBRE represented T3 Capital it would have been obvious which way the tenant was leaning. T3 Capital would have lost its leverage in negotiations. Since T3 Capital hired Norman Bobrow & Co., Inc. (A tenant-rep only firm) it was able to fully control the flow of information about its final plans and leverage each building against each other for the best possible numbers.

With aggressive negotiations with 1 State Street Plaza, we eventually negotiated a rent of $30.00 for 5-years, $32.00 for 5-years and $34.00 for the remaining three and a half years, a total of $5,203,275 off the initial asking price. Combined with a $1,081,200 workletter and eight (8) months of free rent valued at $576,670, T3 Capital had a total savings of $6,861,145 over the course of their lease.

Elie Tahari’s lease was expiring on Seventh Avenue and 36th Street. His space was depressing, dark, and obsolete. His needs were for a unique space that would attract new customers, as well as inspire him to create new products. We secured for him a seven and a half year sublease on the Entire 48th floor of 1114 Avenue of the Americas which was formerly the executive offices of Peter Grace. The rent was $22.00 for half the term and $24.00 for the second half, where the sublessor was asking $35.00.

Elie Tahari’s sales went up 300% and secured him as one of the top designers in the world.

We later rented him eleven additional spaces totaling approximately 300,000 square feet, including the Entire 8th Floor of 1114 Ave of the Americas, Entire 50th Floor of One Bryant Park, Entire 4th & 5th Floors at 510 Fifth Avenue, Entire 2nd & 3rd Floors of 520 Fifth Avenue, Entire 2nd Floor at 501 Fifth Avenue, Entire 14th, 31st & 32nd Floor of 11 West 42nd Street and a 190,000 square foot warehouse in New Jersey which was later purchased by Elie Tahari.

Elie Tahari will tell you that a major portion of the success of his business came from the deals which were negotiated by Norman Bobrow & Co., Inc.

In 2007 Elie Tahari rented the Entire 50th Floor of the soon-to-be-completed One Bryant Park for a total of 30,000 square feet. While the economy was thriving in 2008, Elie Tahari felt that the property would be too risky to carry despite paying $75.00 below market rental. Due to Bank of America’s rapid growth in the building and the increasing market, we were able to negotiate a cancelation of this obligation for a penalty of only one month of rent. All this occurred six months before the market collapse in September of 2008.

In 2010, we negotiated the sale of Elie Tahari’s property 510 5th Avenue, for one of the highest prices paid per foot of any office building and four times the amount he paid for the property in 2001. Simultaneously, we leased back three floors for his continuous use for 15 year at $10.00 per square foot below market.

In 2004, Giorgio Armani who occupied the Entire 14th at 11 West 42nd Street was paying $56.00 per square foot which was increasing to $62.00 per square foot. Armani sublet their space to Elie Tahari for seven years at an incredibly low $29.00 per square foot with no increases. The space was truly a diamond in the rough as it had high-end features such as custom marble, glass and sheetrock throughout the space which was valued at $6,000,000. In January 2011, one year before lease expiration, we renegotiated his 38,000 square foot lease for a new fifteen year term at $20.00 below market. This included a $3,000,000 concession package (which could all be converted to free rent) even though the space was in mint condition.

The ILO was a tenant we worked with for over 30 years including their relocations and renewals. In 2010, the ILO called our firm to negotiate their renewal at 220 East 42nd Street (The Daily News Building), a building they had been a tenant for close to 20 years. Although they were happy with the building, their space was severely outdated and needed to be freshened up. Additionally, the space was not sprinklered and due to a law that would be taking effect in 2019, the space needed to have sprinklers installed before that date.

We approached the Landlord, SL Green with a reasonable offer, which included a work allowance, free rent and some base building work, standard for any new tenant. SL Green arrogantly raised their square footage by 30%, offered a $10.00 a foot workletter and no free rent. Additional they asked for rents $12.00 above the market rate.

Angry at their response, the ILO had us search for new space outside of the building even though it was over a year before their lease expiration. After an extensive search, we focused our negotiations on 1 Dag Hammarskjold Plaza a building known for its unobstructed river views and prestigious tenant roster of United Nation missions.

Since the ILO was founded over 100 years ago and had an annual budget of close to one billion dollars we were able to secure a rental at a substantially lower rate than their space at 220 East 42nd Street. Additionally, the Landlord provided a fully sprinklered new building installation. Finally, since the ILO still had 12 months of rent remaining at 220 East 42nd Street, the Landlord provided free rent through the end of that existing lease with no additional expenses during that term.

All of this was achieved without the ILO having to put up a security deposit.

Davidson, Dawson & Clark is a prominent Estate and Trust law firm that was established in 1949. They were originally located at 330 Madison Avenue and had remained there as a tenant for approximately 30 years. In 1997, the firm hired Norman Bobrow & Co. to handle its relocation to better space, as their current space had grown tired. We initially ventured to move them to 100 Park Avenue, but the numbers were simply not working out. Our research revealed that due to the rapidly increasing rental market, it would be more optimal for the company to renew its lease for another five years.

In 2003, after the commercial market had topped off, reversed, and finally bottomed out, we recommended to the firm that it would be an ideal time to relocate. Due the additional time they had spent at 330 Madison, we strongly believed that their worn down space would hurt their ability to attract new business.

Adhering to our strong advice, the firm made the move to the 38th floor of the Lincoln Building. We secured them a 10-year lease with a 5-year fixed renewal option, including a $65.00 work letter over base building work and 10 months free rent.

In 2012, the leasing market was steadily rising in the midtown area. Although Davidson Dawson & Clarke had three years remaining on their lease, we saw an opportunity to renew their existing lease, as the building had multiple floors available both above and below them. Since the Landlord saw the firm as the ideal tenant for the building, we believed that we would be able to negotiate several items, which would save the firm tens of thousands of dollars over the years.

Additionally, their space was in pristine condition with a multimillion-dollar installation; however, since the Landlord was unaware of the existing installation, we were able to squeeze out a cash allowance and free rent from the Landlord. We also grabbed the opportunity to change some of the terms on the initial lease to more favorable terms. Some of these items included:

  • A new base rent $15.00 below market.
  • Changing the annual escalation from a CPI to a Direct Operating escalation saving the firm thousands of dollars annually.
  • Three months of free rent plus a cash allowance to improve the space.
  • Renewal and cancelation option.
  • New base years on the real estate and Direct Operating escalations.

Not only were we able to lock in a new ten year term, we were also able to provide stability for the younger partners.