Administrative Services, Inc. (ASI) retained West, Lane & Schlager to dispose of a portion or all of their space in downtown Bethesda, MD in an effort to improve their financial situation and create operation efficiencies.
ASI no longer needed the space in Bethesda because it had leased an additional 18,000 square feet in Chevy Chase, MD which was needed for other office functions but had the ability to house all their operations under one roof. Disposing of the space in Bethesda two years early posed numerous challenges. First, ASI's rent was significantly above market, but they were not willing to dispose of the space for less than the remaining liability. Also, though their landlord had no motivation to entertain ASI's lease prior to their expiration or show their space to building prospect, ASI was not willing to contribute any cash to dispose of the space. The landlord would only consider a termination in the event ASI paid its entire remaining liability plus expenses associated to them leasing the space.
WLS canvassed the building and market for possible replacement tenants and identified a tenant, Evidera, who was interested in ASI’s space, but only on a direct-lease basis, not a sublease and came at a cost of $600,000 to ASI. WLS devised a plan to identify a new landlord and building that was willing to absorb the $600,000 cost while providing space to ASI that could accommodate all of ASI’s occupancy requirements. Ultimately, WLS orchestrated and successfully executed a four-party negotiation to terminate ASI’s lease, at no cost to ASI, relocate ASI to a new space that consolidated their office functions under one roof (50% space reduction and 100% employee retention). There was no cost to ASI associated to the disposition of the office spaces or the relocation to the new space.
WLS’ strategic planning and implementation yielded significant short and long-term occupancy cost savings relative to ASI’s in-place costs. Specifically, ASI reduced its real estate costs by approximately $1.3 million in the first 18 months of the new lease, and reduced its occupancy costs by approximately $500,000 per year over the next ten years.