PotashCorp, the world’s largest fertilizer company, had a lease that wasn’t expiring for another five years. They had no renewal rights in their lease and 25,000 square feet more than they needed, which they were subleasing to other tenants. They wanted a real estate strategy that reflected their long-term vision, including being able to properly size their space going forward.
To clarify their goals, our team interviewed 10 key employees, ranging from the CEO to members of HR, IT and finance. We clearly heard that they liked the building, the space and the location, and wanted to secure their tenancy there for the foreseeable future.
We also knew we had to minimize the impact on the employee base, as the firm had recently been the target of a hostile takeover. This created some concern among the workforce about PotashCorp’s permanence in the Chicago area.
Once we had a clear and detailed understanding of PotashCorp’s objectives, we looked for opportunities for the best outcome for them. After a complete analysis of the current landlord’s portfolio, we found that there was instability to exploit. While the building that Potash occupied was full, the lack of leased space in its overall portfolio gave the landlord reasons to be concerned. We also employed leverage provided by the overall depressed marketplace and analyzed the Northbrook location against other buildings and potential developments in the area to come up with compelling, viable relocation scenarios.
With the alternatives fully vetted and negotiated, we were able to approach Potash’s current landlord with an arsenal of reasons to come to the negotiating table. It wasn’t lost on the landlord that we had completed a detailed analysis of their portfolio.
Savills Studley Chicago negotiated a new 10-year lease for Potash with a locked-in rate that reflected the depressed market rates and secured flexibility to expand or contract their headquarters location. We also secured renewal rights, a rent abatement package and a tenant improvement allowance that could either pay for any desired renovations or be converted into cash.
Because we were ahead of our client’s lease expiration by five years, we created an annual cost savings for them of 25%. We also reduced sublease risk by assigning the surplus space subleases to the landlord many years before they were set to expire.
1101 Skokie Boulevard,
Meet the Team
Executive Vice President, Director, Central Region Lead
Executive Vice President, Managing Broker