Duke Realty, LG Electronics’ Landlord in Romeoville, IL, asked LG to relinquish 55,000 SF two years prior to its expiration to accommodate another tenant’s expansion requirement. LG hired Jack Rosenberg and Fred Regnery to assist LG in analyzing the Landlord’s proposal, to maximize Landlord concessions and to extend the lease for two years. During this negotiation, LG increased the amount of product that would flow through the building, meaning that they would not be able to reduce their size. However, LG still wanted Landlord concessions and a short term lease extension.
Jack and Fred approached Duke Realty directly to negotiate market concessions and the renewal. Duke Realty was very aware of the high vacancy rates and slow absorption in the market. Jack and Fred also used their knowledge of Duke Realty’s other vacancies in the market and how their status as a public REIT would affect their decision making.
Duke Realty agreed to offer LG Electronics two months of free rent in the last two years of the existing lease and to extend LG’s lease for two additional years at a lower rental rate while giving LG an additional 3 months of rent abatement in the two year extension period. Jack and Fred’s efforts helped LG reduce their occupancy cost by 17% with LG only committing to a two year lease extension in return.