Savills Uses Onex’s Brand Equity as Leverage to Negotiate Contiguous Floor Plan for Expanding Company
Onex Investment Corporation, a Toronto-based private equity firm with assets under management in excess of $24 billion, had recently undergone a significant remodel and expansion at its office headquarters. As the firm’s leadership remained committed to strategic growth, the decision was made to examine its New York location which could no longer accommodate the growing headcount and still provide a viable location for client meetings and visits from headquarters personnel.
Upon Savills workplace analysis, it was evident that Onex not only required additional employee space and conference rooms, but also required multiple upgrades to its existing space on the 40th floor at 712 Fifth Avenue. Furthermore, it was important to Onex that the firm’s principals not be disrupted during the expansion or relocation process and consideration be made for their preferred accommodation, the St. Regis Hotel at 55th Street and Fifth Avenue. The firm also noted that it enjoyed the prestige and ambiance that was afforded by its current unobstructed views over Central Park.
The Savills team quickly compiled a list of alternative trophy buildings within walking distance to the St. Regis Hotel, including off-market space at 9 West 57th Street, arguably among the most desirable buildings in Manhattan. While negotiations began on two different relocation alternatives, Savills simultaneously began discussions with the existing landlord, for Onex’s current floor as well as three occupied suites which were coming available on the contiguous 39th floor. Ultimately, Savills was able to leverage the Onex brand and outstanding credit to convince the landlord to lease those three suites to Onex, effectively leasing them out from under the existing tenants.
Further concessions were secured from the landlord including a significant work allowance to build out the expansion space, with substantial penalties for late delivery on any of the units, along with an additional allowance for improvements to the firm’s existing space on the 40th floor. In addition, Savills negotiated for use of an entire vacant floor as temporary space so as to ensure minimal disruption throughout the process, while renovations within the existing space were underway.