Guthy-Renker Corporation, one of the world’s largest direct response television companies with annual sales in excess of $800 million, required additional space to accommodate one of its growing businesses. Moreover, with only 30 months left on its existing 43,000-square-foot lease, Guthy-Renker was concerned about an increasingly tight West Los Angeles market and increasing rental rates.
In addition to expanding and locking-in rental rates for a five-year period, Guthy-Renker also wanted to have some control over its future expansion. Studley (now Savills Studley) identified approximately 12,000 square feet of available space in a nearby building which had an adjacent tenant whose lease expired in 2007. Rather than lease the expansion space and commit to a lease extension, Studley suggested a slightly different approach to get the landlord to provide Guthy-Renker an option to expand in 2007. First, Guthy-Renker leased the 12,000 square feet for 30 months only (coterminous with its existing 43,000 square feet). Studley then negotiated a provision that extended the lease for all 55,000 square feet if the landlord could deliver Guthy-Renker an option on the adjacent 13,000 square feet in 2007.
Since the landlord was motivated to extend Guthy-Renker’s lease by 30 months, Guthy-Renker received the option to lease the adjacent space in 2007, and the lease was automatically extended. In addition, Guthy-Renker received an improvement allowance which was a significant increase over the original lease terms. More importantly, by the time the lease extension was triggered, Guthy-Renker’s pre-negotiated 2007 lease rate was already attractive by 2005 standards.
Santa Monica Business Park,
Santa Monica, CA
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