LEAP
LEAP head office renewal –2018
LEAP Dev sought Counsel's insight on their current lease and a 2019 extension offer, weighing the benefits of staying versus relocating. While content with their space, they considered a potential move for better prospects.
Client need
By 2018, LEAP Dev and its associated businesses had grown significantly due to the success of their highly popular legal software platform within Australia and elsewhere around the world. The Group’s existing lease expired at the end of 2019 and its office fitout had recently received a modern upgrade.
At the time, the Sydney CBD office market was very much a “Landlord Market” due to the lack of supply and the situation was set to worsen significantly of the next years with an expected increase in rents and shrinking incentives.
LEAP’s people are a key contributor to the Group’s success so maintaining a high quality, convenient and easily accessible workplace was essential. In addition, a key aspect of managing its rapid growth prudently, was the careful control of costs, in particular, real estate costs and it had determined maximum medium-term annual real estate cost budgets. Lastly, LEAP Dev was extremely concerned with the potential for business disruption risk.
Our approach
Our initial Stay vs Go Analysis did not yield a clearly superior outcome so we recommended testing through a competitive market search. We conducted a number of inspections and undertook a thorough comparative analysis, including financial, building quality and location. After we assessed other available options against LEAP’s selection criteria, renewing the existing lease was determined to be the preferred option subject to improving the financial outcome significantly, in line with its cost medium-term budgeting.
Our value
By maintaining leverage through competitive tension, we engaged with the landlord on a non-exclusive basis and negotiated a heads of agreement with the landlord. After working closely, assisting LEAP Dev’s internal legal counsel and external legal representative, we coordinated the execution of a new 4-year lease.
The total cost over 4 years was within LEAP Dev’s budget limit and represented a saving of approximately 18.5% or in excess of $1.1 million compared to the landlord’s initial proposal, accomplished in a deteriorating leasing market.
“Emil understood our position and using his clear understanding of the office leasing market drivers, made clear, pragmatic recommendations. As a result of Emil’s input, we were able to secure excellent terms on a new lease, providing budget certainty, eliminating risk and creating an opportunity through our workplace.”