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.
our client’s need
Initially, LEAP Dev asked Counsel to review the existing lease, a proposal from its landlord to extend the lease term after the expiry in 2019 and provide a “Stay vs Go Analysis”. The existing office still met the Group’s needs however the executive team was open-minded about relocating if this offered a superior outcome.
LEAP Dev’s people are a key contributor to the Group’s success so maintaining a high quality, convenient and easily accessible the 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 initial Stay vs Go Analysis did not yield clearly superior outcome so we recommended testing the market 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 its LEAP Dev’s selection criteria, renewing the existing lease was determined to be the preferred option subject improving the financial outcome significantly in line with its cost medium-term budgeting.
By maintaining leverage through competitive tension, we engaged with the landlord on a non-exclusive basis and negotiated heads of agreement with the landlord. After working closely, assisting LEAP Dev’s internal legal counsel and external legal representative, we co-ordinated 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.