Amtrak Explores Most Viable Solution for Expiring Lease at Union Station
The National Railroad Passenger Corporation (Amtrak) occupied approximately 250,000 square feet across three buildings in downtown Washington, DC. Amtrak needed a solution for its expiring lease at Union Station, which housed the transportation company’s headquarters. Amtrak took the opportunity to fully assess and align its long-term real estate strategy with its overall business goals. The company engaged Savills to explore the most viable options including consolidating, remaining decentralized or relocating to a new market altogether.
Savills developed and analyzed multiple occupancy scenarios: A full consolidation into one of Amtrak’s existing buildings; a full consolidation and relocation to a new property; and a decentralized operation in Washington, DC and/or other East Coast markets. The occupancy scenarios included cash flow pro formas, budgets, schedules, demographic maps and qualitative analysis to help Amtrak make an informed decision. After careful consideration, Amtrak determined that its headquarters needed to remain in close proximity to Union Station and the other functions could potentially be relocated elsewhere and at a later date.
With a clear direction in mind, Savills identified, toured and competed multiple locations for its headquarters functions located at Union Station. Supported by high-quality market research and in-depth analysis from Savills, Amtrak chose 1 Massachusetts Ave NW, located just one block from Union Station, as its new headquarters. Savills negotiated an 11-year, 85,000-square-foot lease with flexible terms, economical rates and above-market concessions.
After securing a new location for Amtrak’s headquarters, Savills quickly leveraged a tenant-favorable market and a low-cost early termination right to restructure Amtrak’s lease at 10 G Street NE. The restructured terms provided about $1 million in annual savings without extending Amtrak’s original expiration date. Savills completed the full process from identifying buildings to executing the lease in two and a half months.