Savills Uses Softening New York Market to Help Westpac Secure Above Market Landlord
Westpac, the oldest Australian-based banking company, began an initial office space review nearly two and a half years in advance of its lease expiration. The company required modifications to their space, including adding conference rooms, upgrading technology infrastructure and providing accommodations for a subsidiary that was located in a non-contiguous suite on the same floor.
Savills was retained to advise Westpac as to the most cost effective and efficient use of space. Westpac informed Savills, however, that any relocation would have to replicate their data center which supports their 24-hour global trading operation. There could be absolutely no disruption in the business operations of the data center, which would entail a multi-million-dollar investment to recreate elsewhere.
At the time Savills was engaged, the building’s primary tenant, L’Oreal USA, had committed to relocating to Hudson Yards. The team at Savills began to scour the market for alternatives at multiple locations, signaling to the landlord that Westpac also intended to relocate at the end of their lease.
By leveraging the landlord’s need to fill the void due to the L’Oreal impending departure, Savills aggressively negotiated below-market renewal terms, which included a full concession package to retrofit and renovate Westpac’s existing space while forcing the Landlord to relocate its own management office off Westpac’s floor. The landlord’s above-market economic concessions enabled Westpac to add conference rooms, redesign its layout and increase efficiencies, while avoiding the costs and complications of relocating its data center. The reconfigured floor provided for future growth and accommodated Westpac’s subsidiary, thereby avoiding the dilemma of accommodating them on a separate floor.