Before we were retained by The Bar Association of San Francisco (BASF), we provided them with an extensive review of their lease and operating history and uncovered a range of financial concerns including suspected overpayments of operating expenses. As a result of our report, we encouraged an audit of the landlord’s books prior to commencing renewal negotiations.
BASF’s objectives were to either renew their existing lease or relocate with as little money out of pocket as possible for moving expenses, tenant improvements, architectural fees, furniture and related costs—especially considering the then-rising real estate market. Rent objectives were to fix 10-year rates below $30/sf per year at a time when rates in the most peripheral areas of San Francisco far exceeded that level. Simultaneously, BASF continued to provide its Continuing Legal Education courses to its Members, 3-4 times per week, at various large venues in the downtown area. We suggested that they also consider relocating to a space that included a meeting space as part of the lease to help them save money in the long term.
After thoroughly space planning and negotiating at several locations, including the potential renewal and renovation at their existing location, we determined that relocation to The Old Federal Reserve Building was the ideal choice for BASF. The economic efficiencies of The Old Federal Reserve Building, its optimal floor plan and the building owner’s flexibility and generous tenant improvement allowance greatly favored BASF relative to potential costs and opportunities elsewhere.
We successfully negotiated an aggressive 10-year average rent under $30/sf per year and offset virtually all of BASF’s transaction costs, including tenant improvements, design fees, moving expenses, furniture costs, cabling and equipment. BASF leased the entire 3rd floor, formerly the Orrick library floor, which now houses—at our recommendation—a 150-person auditorium for CLE classes and other programming. Their new space was custom built to BASF’s specifications at a total cost of $2.1M, of which only $20K was out of pocket—the landlord covered the balance. In addition, the lease auditor we recommended successfully challenged the pass-through expenses of BASF’s then-current lease, returning more than $60,000 to BASF.
The Bottom Line:
It pays to enlist experts who look closely at your options and stick with you through every step of the process.
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