Marisa Sanchez

Busse Place Case # 1

1, Leasing Strategy

        Currently Marisa Sanchez has made three different offers to three prospective tenants. The current prospects are Northwest Trust Company, Meineke & Bock, and finally Riggs Executive Search group. The following table summarizes the current offers being provided by Sanchez.

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Currently Busse Place has a vacancy of 61.6%, which is approximately 50,524 square-feet. If the deals can go through with the prospective clients the vacancy percent will be lowered to 32.3% and will only have approximately 26,524 square-feet remaining, which would be very desirable.

Busse place is in a really great location, it has great views of a fountain, forest and some of downtown Chicago. It has a campus like atmosphere and would be very attractive for many different businesses. There is currently a hotel and some other businesses in the area making it even more desirable. Collins Properties promotes a green initiative and has a great reputation in the property management business, which they believe should be a great advantage over the other competitors.

Competition:

There are currently two buildings near by that are competing for the tenants, they are 1500 Higgins Road, and Two Schaumburg Place. The following table illustrates the current competitions tenants.

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The 1500 Higgins Road building was build only two year ago, its quite a large building with 18,000 square feet of rentable space and its currently in a prime location being right across the street from Schaumburg Mall, a regional shopping centre with over 200 stores. The building has a crescent floor plan, an interior atrium, and parking for 850 cars, however the owner of 1500 Higgins Road has been aggressive in matching his rent to the market conditions, which has resulted in a lower occupancy level than wanted. He currently sits at an occupancy of only 29% and has approximately 127,800 square-feet empty.

Two Schaumburg Place is a six-story office with 52,800 square-feet of rentable space. This location is probably the least desirable of the group of buildings. It is quite complicated to find access to the building. It is 10 years old and can only hold 350 cars, however this location has the highest occupancy and only has 38% vacancy. This is most likely because of the cheaper rent; Schaumburg place is willing to reduce rents to assure vacant space is taking up at almost any price. They also have a very poor reputation for having poor maintenance and difficult management.

Tenant Assessment:

Northwest Trust Company is a regional discount brokerage house for financial securities. The company has been expanding aggressively and their least is about to expire. Sanchez knows that signing a lease is a timely matter for them and might possibly be able to take advantage of that. The improvements that NTC needed completed will only have 10 weeks to be completed and insisted that the space needs to be ready by September 15, 2009 as well. NTC would be taking over the entire sixth floor of Busse place, however NTC wanted an option to renew for an additional five years at its own discretion.

The second prospective tenant is Meineke & Bock, which is a local law firm. Sanchez was contacted by Jim Portillo, who is a local broker that has been hired by M & B to represent in the negotiations. Portillio asked for a proposal to take 8,000 square feet for a 10-year term. Portillo had a list of basic requirements that needed to be evaluated, however it required a TI allowance of $30 per square foot. The final requirement that Meineke & Bock required is to have 500 square feet of space reinforced to support high amounts of weight from their law library. The cost is estimated to be approximately $20,000 with a couple different options on how that could be paid.

The final prospective tenant is Riggs Executive Search Group, which is a small executive search firm focused on finance and information technology industry. We had heard that Riggs’ lease was also expiring and would need to renew or relocate. Sanchez met with Riggs and they hit it off immediately. Riggs is only looking for 3000 square-feet and only a 4-year lease. They are currently located in an older building with a location not as desirable away from the expressways and is currently paying $23 per square foot. Riggs feels that he should not have to pay more that $23 per square foot and asked if Collins could improve its offer. While these are Collins only prospects at the time that doesn’t mean that there wont be more applications in the future.

Leasing Strategy:

Northwest Trust Company:

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Currently at the 1500 Higgins building they are offering a tenant with similar square footage as what NTC wants for only $25 per square foot, which is quite a bit lower than our offer of $27 dollars. However, I am going to keep the price at the offer price as NTC is wanting the option of a 5-year renewal at their discretion and Collins must be compensated for the option. I believe between given them that option and the 6th floor in a prime location spot near many other businesses and assuring the space will be available by September 15, 2009 will be able to lock down a deal.