2019-09-16-TransactionalServicesProposalDechertParisFINAL

Preface

Cushman & Wakefield France is delighted to submit this proposal for services in respect of your Parisian offices. We are quite excited about the opportunity of pursuing the great relationship which exists between our two firms : the depth of understanding of your needs and priorities that we have developed over the last few years thanks to our work with you in the US and London, combined with our intricate knowledge of your situation here and of the Paris market generally, mean that we are uniquely positioned to help you make the right decision and then optimize the resulting negotiation which we will lead, or support, as you prefer. Dechert occupies one of Paris’ landmark office complexes. A tired, former 1960’s headquarters of the state-owned utilities company EDF was transformed in 2004-2006 by the leading French developer-investor Unibail. Although they did a great job restructuring the property the building’s structure, due to its forest of columns and its limited slab-to-slab, lettings were initially slow - until the 2007 economic boom ensured the project’s success. The last dozen years have seen peaks and troughs for Capital 8, but in 2018, when Unibail sold to the current owner, Invesco, the building was again 100% let. Your firm took initial space in the building shortly after its completion, in 2007. One of the strengths of Capital 8 is that it is a genuine ‘business center’, with currently some 17 different tenants. This multi-letting has allowed Dechert to progressively extend. First in 2012 – when you signed a new 10 year 1 month lease whilst adding the 10 th floor ‘Centre’ space, then again in 2014, 2016 and 2017. This flexibility should theoretically work in both directions, with the possibility of reducing footprint either through early partial surrender - or through short-term sub-letting. You are rightly commencing your strategy review for Paris well ahead of the 31 st January 2023 lease expiry. The central Paris market is under intense pressure, with average vacancy rates in the CBD under 2%, and well below that for prime space. Competition for space is fierce and rents are rising. Faced with this scarcity of suitable space more and more occupiers are choosing the pre-let route; sometimes as far as two or three years’ ahead. Before committing to occupation beyond 2023 you will want to be sure that Capital 8 still offers the best, value-for-money solution for your long-term needs here in Paris. Since 2007 there have been changes : the building will be nearly 17 years’ old when you reach lease expiry, whilst a direct competitor, Paul Hastings, moved into the former Eurazeo space on rue Monceau - with their own, independent entrance. Meanwhile the building is very expensive; your total occupancy costs are some 1 100€/m². The result of a high rent and high service charges, with a big ratio of common parts. We will help you conduct a thorough, ground-up strategy review, taking into account all salient issues. This will enable you to take the right decisions in a timely manner. Once these decisions are made we will bring all of our experience and market knowledge to bear in order to secure the best possible terms and conditions for Dechert. We will focus not just on financials, important as these are, but also on all the qualitative issues including, for example, future flexibility. We have pleasure in setting out below, concisely, our approach and fee proposal.

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