Savills Reduces Costs for Dickstein Shapiro by Subleasing Surplus Space
At the end of 2013, Dickstein Shapiro had nearly seven years remaining on a long-term lease of 390,000 square feet. Like many law firms that entered into a lease prior to 2008, Dickstein’s spacing needs changed over time as well as the composition of its practice groups. Dickstein had a substantial amount of surplus inventory that was unoccupied. Prior to Savills involvement, the firm had entered into several subleases to offset the excess space. However, Dickstein was still left with more than it needed. By January 2014, a year, it became apparent to Dickstein that a more strategic solution was necessary, and Savills was engaged to assist.
Savills began a comprehensive evaluation of Dickstein’s situation including the ownership, existing lease, existing subleases, various sublease scenarios of the vacant space as well as relocation options. Benchmarking the firm within their peer group was a critical component of the process. Savills studied efficiencies and opportunities for Dickstein to better align its occupancy with current space standards. Savills undertook a detailed evaluation of the owner’s position – including rollover of the note prior to the expiration of Dickstein’s lease and the adverse impact the firm’s departure could have on the building as well as their portfolio. Dickstein’s tenancy represented 40 percent of the building and a significant portion of the Washington, DC portfolio. Savills also developed an optimum disposition strategy for the surplus space at International Square, which would be pursued concurrent with an effort to restructure or relocate.
Savills was able to bring the owner of the building, Tishman Speyer, to the negotiating table by creating viable relocation alternatives and presenting a well-documented case on potential losses to the owner should Dickstein vacate the building. Through this effort, Tishman Speyer ultimately came to a favorable agreement on an early restructure. Dickstein was able to shed the surplus space that was vacant and assign the existing subleases to the owner of the building. In effect, Dickstein was able to reduce their footprint by more than 50 percent resulting in substantial cost savings for the firm totaling more than $50 million.