Many, many thanks to you for your persistence and assistance in helping us to find a new home for our employees in Austin and negotiate a lease that should serve us well for the next 10 years. We couldn’t have done it without you. I know we’re all happy to have it completed.”

– Global Director of Real Estate, Fortune 50 Company

AQUILA represented a Fortune 50 public company in January 2022. As the world was identifying the new norms post-COVID, this company needed as much time as possible to understand its own new “normal.” As the company was approaching the lease expiration for its +/-107,000-square-foot space, they realized that the existing space was inefficient, outdated, and no longer fit the company’s needs. The challenge became finding a new space that would allow them to downsize their footprint and finish their buildout prior to their existing lease expiration.

The company had the ability to leverage its name and achieve a good deal on their own – but they were looking for someone to take their deal from good to great. Trust and Integrity are two pillars the Fortune 50 company historically used to hire commercial real estate brokers in all of their markets along with superior market intelligence and the ability to navigate the negotiation process leveraging their brand name. Due to their past experience with AQUILA, they knew we would not only drive the process that everyone within the company could stand behind and present to the public markets if questioned, but could also generate the best results in the market.

At the beginning of the process, we found a solution on the border of their geographic parameters that we knew was overly aggressive with a three-digit TI Allowance and used it to create leverage with three other buildings in the market. After several rounds of negotiation with all of the parties we leveraged the second option’s economics to significantly improve the final proposal at a fourth building. 

Through the process, we also engaged the fourth building by uniquely leveraging the company’s name and image alongside its willingness to be a “pioneer“ for this new location when it comes specifically to tech engineering talent. Notwithstanding the ability to leverage the other competing buildings, we took more of a “retail strategy” of branding the company as an “anchor tenant” to the area which would drive high-quality engineering talent to the area and push favorable demographics to allow the landlord the ability to recruit other high-quality tenants. Because of this, AQUILA was able to negotiate and achieve economics that was $3.00 per square foot per year less than any other alternative in the market at the time and generated a market-high TI allowance package of $135 per foot.

Net Effective Base Rate Comparisons

Jay Lamy previously represented the Fortune 50 company while he was working at a different firm. Due to these prior lease negotiations representing this client, AQUILA was able to leverage a three-month extension at their current location and at their existing rates. This helped to ensure the company had enough time and flexibility to navigate the permitting and buildout process through the City of Austin which was running serious delays due to post-COVID-19 employment shortages.

As shown in the graph above, the net effective rate terms achieved in this transaction well out-pace any of the other large transactions completed in the same timeframe in Austin dating back to January 2021. This is due in large part to the record-setting tenant improvement allowance.

We were able to reduce the company’s square footage by almost 14,000 square feet and helped them occupy a building that is more efficient and less expensive. Additionally, we used transaction-specific market intelligence and incorporated one of our foundational company values of authentegrity to negotiate with the landlord. This resulted in generating over 36% savings on GAAP Rent from the initial proposal and a savings of 153% on rent utilizing the tenant’s trailing twelve month’s return on assets as its discount rate. This means that the upfront benefits were so enormous, the landlord should be happy its return on capital is not equal to that of the tenant or they would have lost money.

Ultimately, because of all these efforts, we saved the Fortune 50 company over $8.4 million over the life of their lease.

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