Kirkland & Ellis LLP
Kirkland & Ellis opened its satellite office in San Francisco in early 2003. Timing, growth, image and start-up costs were paramount considerations in its evaluation. In order to test the market from a business and real estate standpoint, the firm initially subleased a full floor from Heller Ehrman at 333 Bush Street for 18 months. The project challenge was to locate premier space with views that allowed the firm to take occupancy and assume its rental commitment in phases over a three-year period to align with its headcount and revenue growth projections. Other project goals and challenges included: i) making a long-term commitment at historically low rents, while having the flexibility of a cancellation option; and ii) additional layers of expansion rights that would accommodate the firm’s needs over a 12 year period.
The Studley (now Savills Studley) team competed against all of the local and national real estate firms, and was awarded the assignment. We were retained to analyze Kirkland & Ellis’ facility requirements and economic parameters, and to identify the ideal facility and location, with a particular focus on solving the challenges and priorities described above. We identified 18 potential buildings, and narrowed the list to six finalists that met the Kirkland & Ellis’ site selection criteria. An aggressive, competitive process was employed among all six viable candidate buildings, yielding a market-making transaction in a trophy San Francisco building.
The transaction resulted in a historically low effective rent over 12 years (for trophy view space), a significant tenant improvement allowance capital contribution from the landlord, phased occupancy and rental rate obligations to match the firm’s projected growth, and a cancellation option. The value added from the first proposal to the final letter of intent was $4.5 million.
555 California Street,
San Francisco, CA
Law Firm Practice Group