Case Studies

SIEMENS

Relocation/Consolidation | Minnetonka, MN

Siemens and it’s various operating companies occupied multiple location throughout the Twin Cities, many of which had leases expiring within one year of each other. Siemens established a corporate initiative to consolidate its operations in various markets if at all possible. The largest of the Siemens operating companies was leasing 280,000 square feet but only needed 160,000 square feet in a more efficient building. This requirement, in addition to the other divisions, resulted in an aggregate need of approximately 160,000 square feet. The assignment was to assist Siemens in reducing its real estate costs through a consolidation of its facilities.

RESULTS

A building was identified that was available for sublease and a new lease was ultimately structured direct with the building owner.
Through the consolidation, Siemens was able to reduce its local space needs from over 250,000 square feet to 160,000 square feet, thus saving several million dollars over the ten-year lease.
Siemens was also able to obtain a $40 per square foot concession package to offset construction and moving costs along with furniture at no additional expense. Project management professionals managed tenant improvement projects and provided value engineering, thus reducing expenses.

APPROACH

A comprehensive survey was conducted of the South suburban market to identify possible relocation alternatives.
The client specifically required easily accessible first floor space.
LREA also leveraged its Project Management practice group to complete a use assessment to assist the client in maximizing its existing space and identify opportunities to accommodate future growth. With competitive market date in hand, LREA approached the Landlord’s representative to initiate lease renewal discussions.

RESULTS

LREA negotiated a 5.5-year lease renewal for the client’s existing 6,817 square foot space, including restructuring the terms for the remainder of the current lease.
The lease restructure included six months of gross free rent during the remainder of the current lease term, which expires in December 2011.
At the end of the free rent period, an approximate 14% net rental rate decrease will take effect. In conjunction with the lease renewal, the client also received a $15 per square foot tenant improvement allowance, of which $5 per square foot can be spent at the client’s sole discretion or applied as a rent credit.
The lease renewal also called for two 5-year renewal options and an expansion option to accommodate the client’s future growth needs.

APPROACH

Established “Playbook” of standard documents and processes that are utilized in every transaction including the following: project initiation forms, lease comparative/financial analysis, meeting dashboards, close-out documents and appropriate technology platforms.
LREA assists Viad in Acquisition/Dispositions, Site Selection, Market Analysis, Relocation & Consolidations, Market Analysis, Lease Negotiation & Renewals, Project Management, Property Tax Abatement & Reduction, Lease Review & CAM Audits, Build-to-Suit Planning, Property Management and Demographic Analysis.
Extensive negotiations occur on every transaction to ensure that Viad’s business objectives are reflected in their real estate portfolio’s make-up, leasehold documentation, and overall lease flexibility.

RESULTS

LREA in partnership with Viad’s in-house real estate team crafted the Playbook to Viad’s specific needs which has successfully streamlined the overall process both saving time and allowed the unified LREA/Viad team to be consistent in their methodology and flexible in their management, providing Viad Corporation with strategic solutions as the companies needs continue to evolve.
Throughout our long-term relationship with Viad Corporation, LREA has implemented continuous strategic planning within the daily management of the account by way of utilizing best practicing/benchmarking which has effectuated overall savings on every transaction negotiated.
The rental rate in every lease renewal that the LREA/Viad Account team has negotiated has been lower than the prescribed renewal rate that was written in the lease. Additionally, the net effective rate has been lower than the market rates for tenants in comparable buildings.

U.A. Plumber’s Local Union #15

Maple Grove, MN

U.A. Plumber’s Union Local #15 was experiencing growth pains. Their union hall was located in an older building in the heart of the Minneapolis CBD. Their training facility was co-located with a growing technical college in need of additional space. Michael help U.A. Plumber’s Union Local #15 to locate a site and partner with the right experts to accomplish their real estate goals.

U.A. Plumber’s Union Local #15 occupied two facilities that were not meeting their needs. The goal was to combine the union offices/hall as well as the existing training center under one new modern facility to assist with recruiting and training efforts.

CHALLENGES

The Union had financial benefits to moving as early as possible and desired to relocate outside of downtown Minneapolis in order to better serve their member needs for meeting attendance and member training. Existing industrial facilities were difficult to find in the midst of strong demand for industrial buildings, but the use and ceiling heights were needed for much of the required training. Parking needs were much greater than traditionally provided for an industrial building so a site was needed to support their desired level of parking.

RESULTS

Michael embarked on a process that included interviewing and recommending architects and general contractors. After an extensive interview process, these providers were selected and he negotiated their fees and contract agreements. Michael managed a detailed programming and budgeting process to ensure the Union’s needs were met initially and in the future. An IT/AV consultant was engaged to ensure state of the art classrooms and technology.

Michael led the site selection process, presented alternatives, worked with the architect and contractor to evaluate each alternative, and recommended the best option. Ultimately, a 96,000 square foot industrial building was selected and a purchase price was negotiated of the building. The architectural and budgeting process was managed to ensure the project met the union’s $21.6 million dollar budget.

Michael worked with an interior designer to select and bid all furniture, fixtures, and equipment. They worked closely with a security company to select systems and secure the building and managed the bidding process as well as the construction process to ensure on time and under budget delivery. Michael managed the payment and lien waiver process to ensure proper and accurate payment. Lastly, he managed the move and close-out process to ensure punch list items were completed.