The Faucet Queens, Inc. (TFQ), an importer of home hardware products sold through non-hardware store retail chains, was seeking to reduce its occupancy costs in a 58,132-square-foot Lake County distribution and headquarters facility and extend its lease term. TFQ was committed to its lease for 12 months at an above-market lease rate. The company wanted to remain in the immediate area because of its customer base and the high quality of the existing building. They also needed flexible lease terms to allow for future expansion or relocation. Operating under these restrictions, Jack Rosenberg, SIOR and David Liebman, SIOR identified an opportunity to reduce TFQ’s lease rate for the last year of the existing lease and to extend the lease at a lower rental rate with flexible terms.
Utilizing their knowledge of the Lake County leasing market, Jack and David identified that TFQ’s current lease rate was 30% above-market. David and Jack toured TFQ through similar buildings and procured proposals from building owners that confirmed this analysis. TFQ would have moved to a new facility to realize cost savings, but staying in the existing building presented an opportunity for an immediate occupancy cost reduction, rather than waiting for the lease to expire in another year. David and Jack educated TFQ’s landlord about current market conditions and alternatives for TFQ in other buildings. The landlord responded in a productive manner.
Jack and David persuaded TFQ’s landlord to reduce TFQ’s rent by 30% and extend the lease for three additional years at the lower rate. TFQ saved $16,000 per month on its base rent for the remaining year of the existing lease term. By approaching the Landlord in a collaborative manner with current market information, the Landlord retained TFQ as a tenant for 3 additional years. TFQ, Jack and David’s client, realized immediate savings, lower occupancy costs and more flexibility for the duration of the lease term.