CHALLENGE

Kraus Royal Scot, Inc (“Kraus”), a Lemont based carpet and flooring distributor, had outgrown their existing 63,612 SF warehouse/distribution facility but remained committed to a two year lease term with their current Landlord.  After interviewing several corporate real estate service providers, Kraus hired Jack Rosenberg and Fred Regnery to determine the best real estate strategy to maintain their growth and minimize their real estate costs. Challenges included:

  • Determine SF and infrastructure requirements for new facility
  • Currently paying above market lease rate
  • Two year obligation on existing lease—avoid double rent
  • Limitations of current facility constrained business growth

STRATEGY

After analyzing Kraus’s current lease as well as prevailing market conditions, the project team determined Kraus had an opportunity to secure a new, modern distribution facility in advance of their lease expiration by utilizing aggressive Landlord concessions to mitigate their existing lease obligation.

RESULTS

The Colliers team utilized a Request for Proposal (RFP) process among competing Landlords to efficiently identify the most aggressive landlord in the market.  Their inside knowledge of the institutional investment market allowed them to understand the factors effecting the new landlord’s pricing. They leveraged this information on behalf of Kraus to determine the most aggressive lease economics the landlord was able to provide.

After negotiating among competing landlords for several rounds, they helped Kraus to secure an unusual 9 month free rent period on a new 7 year lease term in a new construction distribution facility with prominent I-55 frontage. Kraus was able to move to a new constructing building and increase their total cubic square footage by 109% while only increasing their lease rate by 9% in the new facility.