Case Study

Guthy-Renker Corporation

TAMI

Marketing Company Guthy-Renker Corporation Takes New Approach in Controlling Future West LA Expansion

CHALLENGE

Guthy-Renker Corporation, one of the world’s largest direct response television companies with annual sales in excess of $800 million, required additional space to accommodate one of its growing businesses. Moreover, with only 30 months left on its existing 43,000-square-foot lease, Guthy-Renker was concerned about an increasingly tight West Los Angeles market and increasing rental rates.

SITUATION

In addition to expanding and locking-in rental rates for a five-year period, Guthy-Renker also wanted to have some control over its future expansion. Savills identified approximately 12,000 square feet of available space in a nearby building which had an adjacent tenant whose lease had expired. Rather than lease the expansion space and commit to a lease extension, Savills suggested a slightly different approach to get the landlord to provide Guthy-Renker an option to expand. First, Guthy-Renker leased the 12,000 square feet for 30 months only (coterminous with its existing 43,000 square feet). Savills then negotiated a provision that extended the lease for all 55,000 square feet if the landlord could deliver Guthy-Renker an option on the adjacent 13,000 square feet.

RESULTS

Since the landlord was motivated to extend Guthy-Renker’s lease by 30 months, Guthy-Renker received the option to lease the adjacent space, and the lease was automatically extended. In addition, Guthy-Renker received an improvement allowance which was a significant increase over the original lease terms. More importantly, by the time the lease extension was triggered, Guthy-Renker’s pre-negotiated lease rate was already attractive by their prior lease standards.