2019-09-16-TransactionalServicesProposalDechertParisFINAL

Our understanding of the Brief

Dechert wishes to appoint a real estate consultant to commence a thorough review of its Paris office premises, over 50 000 sq ft and costing some 6M$ per year, well ahead of the lease expiry on 31 st January 2023. Although your lease expiry is still over three years’ away, you estimate that your current space requirement may be closer to 40 000 sq ft. So there may be potential to make savings ahead of lease expiry, either through an early lease re-gear or through sub-letting of excess space – commensurate of course with minimal disruption to your business. You wish to examine the possibility of negotiating a new lease for Capital 8, in line with your long- term needs. In doing this you will want to cover off all relevant detail, including the technical quality of the building and its equipment’s life cycle, the tenant mix, the priorities and positioning of your new landlord. Evaluating your current lease terms and obligations, including your unusual lease renewal clause (a Unibail ‘specialty’), will naturally be a critical part of the review. You will meanwhile want to conduct a thorough review of alternatives in the market, assessing all potential relocation buildings that can currently be identified for occupation in 2022. Given market conditions, and at this stage in the project, this will essentially concern single-occupier, standalone opportunities, typically already undergoing renovation or where tenant departures are imminent. Although such properties can give great visibility and identity they frequently have the drawback of smaller, sometimes difficult, floor plates. Once a thorough review of options has been conducted we expect you will want to test the appetite of your current landlord for an early lease renewal. Notwithstanding very strong prevailing market conditions, we expect Invesco to want to retain Dechert as a high-profile, long-standing ‘core’ tenant of the Capital 8 complex. To maximize pressure on him we recommend undertaking a parallel tendering of a selection of suitable and credible alternative buildings. These will not be numerous, but we have already identified some good opportunities that are worth consideration in their own right and will in any event serve as an effective smokescreen for negotiations with Invesco.

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