Ulta Salon, Cosmetics & Fragrances, Inc. (“ULTA”), the largest beauty retailer in the country, was exploring alternatives for its Midwest distribution facility in Chicago. ULTA was committed to its lease for 24 months at an above-market rate. Additionally, they had approximately 35,000 SF of office space in the distribution center which made a potential move costly. Because the organization was growing quickly, ULTA was unable to commit to a long-term lease extension.
Recognizing that the lease rates in Chicago were at a 25-year low and ULTA was paying approximately 40% above current market rents, a team from Colliers International’s Chicago office developed a strategy to create negotiating leverage with ULTA’s current landlord, UBS. The firm’s in-depth knowledge of the I-55 market allowed Colliers to develop a short-list of the most competitive landlords in the market and to solicit lease proposals from them which downplayed the need for the large percentage of office ULTA was currently utilizing.
Using the competing landlord proposals as leverage, Colliers compelled UBS to reduce ULTA’s rent by 40% for the remaining two years of their lease and extend its lease for five years at the newly reduced rate.
Colliers was also able to remove ULTA’s responsibility for the roof maintenance and replacement.
Finally, Colliers negotiated a termination right in the lease for ULTA should they outgrow the facility during their term.