Medical Research Firm MedImmune Saves $2 Million in Tight-Market Lease Renewal
Six months before the expiration of its leases in Mountain View, California, MedImmune, a subsidiary of AstraZeneca, approached Savills for counsel with its lease renewal.
The situation was a difficult one because business drivers involved required the company to start immediate renovations to the facility to comply with a new government contract it had recently been awarded. By default, those renovations got in front of the lease renewal activity as the construction timetable warranted the company initiating what would amount to a $9 million dollar renovation program to meet contract compliance issues. In addition, the site was in close proximity to the Google headquarters campus, creating tremendous demand for space in this market. These factors provided Savills with little or no negotiating leverage. The initial proposal from the landlord included rental rates that were nearly double the company's existing rate and provided no additional tenant-improvement dollars to offset the tenant improvements already under way.
During protracted negotiations, Savills and MedImmune were able to achieve a savings of 6%, or approximately $2 million dollars over the term of the lease (approximately $2.00 per square foot in savings) in addition to a $500,000 tenant-improvement allowance.