Busse Place Case Study
Autor: Shiv Patel • April 19, 2018 • Case Study • 384 Words (2 Pages) • 742 Views
Shivam Patel
Busse Place Case Study
- How would you assess the current situation at Busse Place? What leasing strategy should Sanchez propose to Fairchild?
Busse Place is a high quality office building in a prime suburban market in Chicago. It is part of a larger “community” that has retail, dining and hotel facilities. The “campus” is very nicely developed and is well maintained. Busse Place is struggling with occupancy with the building currently only being 38% occupied due to a major tenant going bankrupt. The country is currently going through a recessionary period and unemployment is at all-time highs, especially where Busse Place is located. The office market in the area is currently over supplied and has been long plagued by high vacancy. There is 7 million square feet of available space on the market, making landlords use the most competitive rates possible. Sanchez should propose lease terms that are low enough to beat competitors prices but high enough to cover operating and debt expenses. There should not be many binding lease conditions, which will make tenants hesitant to lease. She should start with trying to lease Northwest Trust Company first and then try to lease the other potential tenants. NTC is a strong tenant with the ability to pay a higher rent and attract other tenants. They are also due up on their lease, so they can move in soon. Leasing NTC will help Collins tremendously as it will raise NOI and stabilize the property until Sanchez leases the rest up, using NTC as leverage for lease rate negotiation and tenant accumulation.
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Sanchez should give Northern Trust Corporation a rate of $21/sf in order to beat the rates of competitors and solidify NTC as a tenant. They’re tenancy is extremely crucial as it will attract other tenants and speed up the leasing process. A TI allowance of $28/sf and 8 months of free rent should be offered. Meineke and Bock and Riggs should get a rate of $25/sf. All other tenants in Busse Place should start paying $23/sf to ensure they keep their leases.
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