LabCorp - Lease extension, Shelton, Conn.
Vestian’s Team negotiated on behalf of LabCorp to secure a new lease extension option that helps LabCorp save on costs and have the flexibility to terminate its lease in seven years.
LabCorp leases 78,500 rentable square feet (RSF) at One Parrot Drive in Shelton, Conn., and when its lease expiration date approached in June 2018, the company turned to Vestian’s Team to help negotiate a new lease extension option.
Three years prior to LabCorp’s lease expiration, the company invested significant capital into the pathology lab facility, and the estimated cost to relocate was $300 per rentable square foot (pRSF). The landlord was aware of this and initially proposed increasing the rent from $20.50 pRSF to $25 pRSF, an above market rate. To help ensure LabCorp got the best lease extension option possible, Vestian’s Team worked with LabCorp’s internal real estate department to understand the pathology labs leased by LabCorp and the potential for consolidations to leverage to the landlord. Additionally, Vestian’s Team researched the landlord’s loan structure and identified how the current market rates could be renewed with cost savings secured by LabCorp
During its research, Vestian’s Team discovered that maturing six months prior to LabCorp’s lease expiration date, the building would be hard to finance without a long-term lease from LabCorp. It also evaluated the following pathology labs in LabCorp’s portfolio for potential redundancies and consolidation: 55,000 RSF in Uniondale, N.Y.; 100,000 RSF in Triangle Park, N.C.; 90,000 RSF in Westborough, Mass.; 90,000 RSF in New York City; and 78,500 RSF in Shelton.
This research allowed Vestian’s Team to combine a business strategy to consolidate with a landlord’s need to refinance his building in order to secure a lease extension of 10 years, with the right to terminate after seven; reduced rent of $17.50 pRSF; and reduced costs of $3 million.
- 78,500 rentable square feet
- Reduced costs by $3 million
- Lowered per annum GAAP by $300,000
- Extended lease by 10 years, with the right to terminate after seven Reduced rent from $20 pRSF to $17.50 pRSF