Savills Lends to Law Firm's Future Profitability with Headquarter Renewal
Williams Mullen was a major tenant at Two James Center, a Class A building in downtown Richmond built in 1987 and during its 20 year tenancy, expanded several times to occupy six full floors. In November 2004, with five years remaining on its lease, Savills began evaluating Williams Mullen’s lease options.
Savills thoroughly analyzed the firm’s present and future space requirements relative to the current and potential space options in the marketplace. The comprehensive analysis looked at a number of possible combinations, based on existing development, planned development, and movement among tenants. Downtown Richmond offered limited large blocks of space within existing Class A buildings, as well as limited available well-situated build-to-suit sites.
There were some significant hurdles to overcome in order to bring this transaction to fruition. The first road block surfaced when Wachovia, a major user headquartered in Richmond, left the market, causing a ripple effect that left buildings that were planned for development indefinitely postponed. On behalf of Williams Mullen, Savills had negotiated lease terms in one of those buildings. As a result, Savills had to revisit to the list of prospective buildings/site options.
The virtues of beginning the process early were realized in the outcome. A number of possible alternatives, both existing and proposed, were presented by the market and evaluated by Savills. All were passed on or placed in a back-up category by the firm. After a lengthy due diligence and collaboration period with developer Armada Hoffler, the firm selected the site on the corner 10th and East Canal Streets, the future location of the Williams Mullen Center, and leased the top seven floors. The building’s central location allowed the firm to remain proximate to other areas of downtown and was designed to provide an efficient use of space and consequently leasing dollars for the firm.
Williams Mullen participated in the development process and the building design to ensure that the finished product, which would bear the law firm’s name atop the building, conveyed its desired image and provided the best possible operational advantages. Some of these tenant dictates included the building’s mullion spacing, which better supports a single-size office space plan and the parking configuration. Savills also secured a number of concessions, which allowed the firm to defer more than one portion of its lease commitment into the future, in some cases by several years. Coupled with a very generous tenant-improvement package, which required no out-of-pocket investment by the firm, and the incentives received from the city, the final terms were compelling not only relative to a renewal, but also for the future profitability of the firm. While the new lease includes a full financial guarantee by the developer of the new building in the event of a late delivery, Williams Mullen was not required to post any personal guarantees or credit enhancements.
Although the capital environment in the United States in the fall of 2008 posed many challenges to the viability of a project like this, Savills was instrumental in leveraging the size and financial strength of Williams Mullen, to guide the project to fruition.