True North Communications had been experiencing rapid growth and had also recently acquired Bozell Worldwide, and with it four new offices. They wanted to determine a real estate strategy that not only would provide them the flexibility to continue to grow, but also try and consolidate their offices to gain some efficiencies from the synergies among the numerous groups.
After meeting with the heads of various divisions of the company, it became clear they need approximately 5,000 to 10,000 square feet within months; 35,000 to 40,000 square feet within one year; and that they had various other locations with needs totaling over 60,000 to 70,000 square feet with leases rolling over in the next two to three years. We immediately compiled all the spaces that could satisfy a short-term requirement for 35,000 to 40,000 square feet, as well as all buildings that could put together 110,000 square feet over the next several years.
We discovered several alternatives that could satisfy various parts of the requirement. But by understanding the various “shadow spaces” in the market, we were able to piece together a block of space at 676 North St. Clair Street for 109,735 square feet that allowed True North Communications to occupy 7,500 square feet of temporary space immediately; 36,737 square feet of space effective January 1, 1999; 72,998 square feet effective December 1, 2000; and provided for two additional floors of 50,000 square feet for expansion. This transaction allowed True North Communications to gain tenant identity with a monument sign as well as lobby signage. They also were able to consolidate from six buildings dispersed through Downtown Chicago down to two buildings that were within one block of each other. This allowed for additional growth and contraction flexibility between the two locations. Additionally, they saved over 35% on their current rent obligation in a market that was substantially higher than when their other leases were negotiated. True North Communications took additional expansion space at fixed rates that were negotiated at the time of the original lease. The rates were $5.50 per square feet below market rates for the building and occupied a total of 146,616 square feet.