Accounting Firm Stonefield Josephson Saves an Estimated $1.5 Million in Lease Relocation
Stonefield Josephson (SJ), an accounting firm, that has since merged with Marcum LLP, was in need of additional office space due to business growth. SJ wanted to minimize operating costs by identifying a new location that would prove to be more cost efficient than its existing lease. SJ was previously located at 1620 26th Street, Suite 400, a premier location in Santa Monica, but wanted to pursue an alternate space with a more competitive rental rate, and was willing to relocate to meet these terms.
Savills was hired to represent SJ to develop an early renewal and lease restructure with the existing landlord. As the market continued to tighten and the office project aggressively secured tenants, the leasing terms became less flexible and rental rates sky-rocketed. Additionally, SJ was situated in the middle of the last large block of space available in its existing building. Subsequently, a new multi-floor tenant approached the landlord to lease space that would impact SJ’s existing space. Consequently, Savills leveraged these new market dynamics to relocate SJ to another building within the landlord’s portfolio at the Century Plaza Towers which provided two major benefits: a more competitive rate and better amenities.
As a result, Savills completed an aggressive 11-year lease which included an early termination from SJ’s remaining two-year lease obligation. In addition, the new space had recently undergone a significant upgrade by the previous tenant. Savills successfully negotiated an above-market tenant improvement allowance, which allowed SJ to redesign the existing space to meet its needs without having to come out of pocket. This included the cost of the move as well as new furniture and workstations. In conjunction with these savings, Savills also negotiated a lease guaranty for SJ which included a minimal financial guaranty at a rate that was superior to the market average. Finally, by making this early move, Savills assisted SJ in saving an estimated $1.5 million over the course of its prior lease term, had SJ renewed its lease within the existing terms. In sum, SJ’s new space is more efficient with a build-out that accommodates its operation and provides ample space for future growth and expansion. All of this was secured with a below-market rental rate and favorable tenant concessions that included eight months of free rent. SJ was also the first tenant of substantial size to lease space in the Century Plaza Towers since 9/11, which hailed a positive turn in the Century City marketplace.