A little more than halfway through a seven-year 38,000-sf lease, the Providence, RI-based commercial finance company negotiated with Equity Office Properties to cut itself loose from 11,000 sf of unwanted office space and extend its commitment for the remainder back up to seven years.
Broker Mark McFarland of Trammell Crow Co. represented Textron in the negotiations. McFarland tells GlobeSt.com that Textron needed to shed the space after selling off one of its business units. To make it happen, McFarland says they identified a tenant that EOP could place in 5,000 sf of the space and gave back another 6,000 sf in exchange for the lease extension. EOP also threw in some tenant improvement dollars, says McFarland.
"Textron is one of (EOP's) bigger tenants in the Kruse Way area and one of its best national clients as well," says McFarland. "EOP stepped up and helped them out."
The lease rate on the transaction is not being made public by the parties involved and was not otherwise immediately available. The weighted average asking rental rate for the Kruse Way-Washington Square submarket is $21.75 per sf per year, full service.
McFarland says a lot of tenants are currently evaluating whether they should renew early, and it's not a bad idea. "With the condition of the market, the tenant is able to get a better financial deal and the owner is able to capture the tenant for the long run before they get out in the market," says McFarland. "The overall concession package being offered is as competitive as it's been in the last 20 years."
Every tenant's needs are different, says McFarland, and the owners are competing today by doing a good job of listening to their tenants and meeting their needs. In addition to tenant improvement dollars, moving allowances and free rent, McFarland says one of the biggest decision factors is data cabling.
With virtually every office networked, the decision to move becomes more complicated, as cost to recreate the network in a new location is between $2 per sf and $6 per sf. "In a market now where you are able to load that into the TI allowance, all of a sudden those who were cautious the last time around are taking a hard look at it."
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