Case Studies

Walt Disney, Miami

Challenge: 

In Coral Gables Florida, Walt Disney Company had several operating divisions scattered in different buildings throughout the city comprising of roughly 50,000sf, all with different lease expirations and varying sizes (Buena Vista, ESPN, Disney Channel Latin America and ABC). Disney Corporate Real Estate, based out of Orlando, wanted to house all of the operations under one roof in a timely manner as recent corporate acquisitions dictated this course of action with an emphasis on consolidation, efficiency, flexibility and cost savings. 

Result:

After an exhaustive search of the market and complete breakdown and financial analysis of the Disney locations and based on their stringent criteria, Chris was able to pin point a property centrally located in a very tight market where all of the local business unit heads could agree on which was the former multi floor sublease of Norwegian Cruise Lines at Two Alhambra Plaza. The next hurdle was how to deal with the remaining lease term on the properties they were vacating. Based on savvy negotiations, we were able to buy out the remainder of the lease obligation at pennies on the dollar at one location and subleased the remainder of the other two locations. In the end, we negotiated a substantial below market rent and concession package for the new combined facility and provided the built in flexibility to allow Disney two termination options during their new 10 year lease, allowing Disney the flexibility to reduce or relocate operations in the future with minimal economic penalties, while still benefitting from the concessions of the longer term.

Coca Cola, Bogota Colombia

 

The Challenge

In the year 2000, in the midst of a challenging economic situation in Colombia, Coca Cola made the decision to shut down most of its operation in Colombia and transfer all production units in Venezuela. Coca Cola needed to dispose of its administrative headquarters (i.e. a 50,000 square feet office building) and its Bogota’s 49,000 sqf production plant.

Approach and Results

Following a competitive procurement process, Flagler Investment Realty was selected to assist Coca Cola in the disposition of its real estate assets. Within 10 months we were able to lease the entire office building to the Spanish Multinational GasNatural and subsequently sell the property to a Mexican real estate investment firm. The production plant was leased to Danzas AEI and simultaneously sold to a local private investor. Finally we negotiated on behalf of Coca Cola the lease of 8,000 sqf in a Bogota Class A building to relocate Coca Cola’s administrative and commercial employees who remained in Colombia.

Global Crossing, Miami

Challenge:

In the fast paced world and scorching technology markets in the late 90’s, speed to market and quick maneuvering was essential to be one up on the competition. Global Crossing needed to set up a Miami based operation to take advantage of their existing cabling in S Florida and their expanding Latin American network. Their need was 150,000sf of technical space which required special floor loads, power in excess of 150 watts/sf, generator capacity for over a week of down time, dual feeds from FPL as well as diverse multiple fiber providers in the immediate area, all within a 12 month time frame.

Result:

Global Crossing engaged Chris Coots, one of the foremost experts on the technology related side in the Miami Brokerage community. Based on Chris’ vast knowledge of the intricate requirements in advance, he was able to pinpoint two projects that could accommodate this very large and critical operation in downtown Miami. The book and specs were prepared within a week and the tour was completed immediately with both of the downtown options being viable for Global Crossing. One location was an existing space within the Omni mall on Biscayne Blvd, and the second location was a “to be built” project in late stages of design and permit, which was the Techonolgy Center of the Americas (TECOTA). After intense negotiations and tremendous concessions achieved, Global Crossing signed a 150,000sf lease at TECOTA and the project was delivered on time and Global Crossing met their very challenging timeline.

Telefonica, Miami and New York

The Challenge:

At the end of the 90s, The Spanish Telecom Giant Telefonica made the strategic decision to gradually transfer its global headquarters to the USA and specifically to Miami, and from there manage its expansion throughout the American continent. As a result of its striking growth, Telefonica became one of the largest real estate occupiers in Miami, where the Spanish group leased over 220,000 square feet of class A office space on Brickell avenue, and acquired a 300,000 sqft flex/industrial property in the Doral soon to be converted into Telefonica's main regional data center. 

In addition to its Miami's installation, Telefonica opened offices in New York and Boston and expanded south of the US border through the acquisition of regional telecom companies in Argentina, Brazil, Peru, Chile and other key Latin American markets. 

Following the "crash of the dot coms", Telefonica's initial strategy was drastically reversed. In 2001, the new CEO decided to reduce the Group's exposure in the US and throughout the region. The restructuring included the reduction of personnel in Miami from 523 to 78 employees. 

Approach and Results:

Falgler Investment Realty was retained by Telefonica in 2002 to assist the Spanish Telecom Company in coordinating and implementing its real estate divestiture strategy. Following an exhaustive planning phase, Flagler succeeded in obtaining outstanding financial results. We negotiated the termination of Telefonica's lease agreement at 1221 Brickell avenue (approximately 220,000 square feet of office space) for 21% of the total residual lease value. The remaining employees were then relocated on 18,000 sqft at 1111 Brickell avenue where PIX negotiated favorable terms for a new 10 year lease.

Flagler partnered with CBRE to sublet approximately 20,000 sqf of class A office space in Midtown Manhattan minimizing Telefonica's losses to approximately 12% of its New York's real estate liabilities. 

As a result of these exceptional outcomes, Flagler was invited by Telefonica's real estate group to assist in multiple assignments in Latin America.

LVMH, Miami

The Challenge

The perfume and cosmetic subsidiaries of the French Multinational LVMH opened their Latin American Sales Centers in Miami to target the Duty Free and Wholesale markets of the Caribbean and Latin America. In 2002, when LVMH retained Flagler Investment Realty, all four subsidiaries (i.e. Cosmetics of France Dior; Guerlain; Givenchy and Kenzo) had their own offices duplicating many functions and lacking in administrative and commercial synergies. Each subsidiary had negotiated its own lease agreement with uneven terms and conditions without leveraging the group's size and strength. Furthermore the subsidiaries' offices had not been upgraded in years and were not adapted to the changes in the four organizations.

Approach and Results:

FI Realty provided LVMH with a market and financial analysis highlighting the advantages of consolidating all four offices within one office space. We also conducted a demographic analysis of all employees for all four subsidiaries to select and validate potential relocation areas/markets. The study emphasized private and public access to the different possible locations from each employee's residence. This report was also taken into account by LVMH's management to calculate transport subsidies, impact of employees' parking cost on the company's P&L, and cost of severances in some cases. Following the initial feasibility analysis, FI Realty was able to narrow the choice of ideal locations to three buildings located in Miami's Business District. Following intense negotiations rounds with all three alternatives, LVMH ended up signing a 5 year lease for approximately 17,000 sqf at The New World Tower in downtown Miami. The benefits of the relocation and consolidation of all four subsidiaries in one central office were four-fold: reduced space (25% less than before consolidation); reduced proportional cost of annual rent; reduced guaranties and securities; and highly efficient and productive work environment.

Bureau Veritas, Miami

The Challenge:

Bureau Veritas is a France-based multinational that offer a wide range of certification, inspection, expertise and audit services along with training and documentary support. In preparation of its IPO completed in the fall of 2007, the group’s management focused its attention to adapt the organization, control costs and improve performances in terms of margins and cash flows. Downsizing the US based facilities overhead was considered as one of the priorities. Bureau Veritas North America (“BIVAC”) called on Flagler Investment Realty to assist in this strategic mission. FI Realty had already worked and represented BIVAC in 2002 in Miami when the group had to drastically reduced its real estate liabilities. In 2007 BIVAC Miami occupied approximately 11,000 square feet of office space in a class A office building in the Doral-Airport West market . Based on the downsizing plan , BIVAC had a 60% excess space.

Approach and Results:

Within 4 months of direct marketing FI Realty was able to assign BIVAC’s Lease to Commercebank and negotiate a new lease agreement at the MICC for 5,700 square feet, and thus achieving BIVAC’s objectives to reduce by more than half BIVAC's real estate overhead.

Deloitte, Miami

Challenge:

Deloitte was tasked with relocating their offices from Wachovia Financial Center in downtown Miami, FL, an old and tired lower floor space with escalated rates to a different more exciting location in Miami. It was determined that the new business model for Deloitte relating to employee work space from corporate had dramatically changed from being located in a traditional office high rise complex to a “live/work/play” environment, with a focus on more of an open plan than previously used in the past.

Results: Deloitte engaged Chris Coots, one of the top office brokers in Miami, to help them analyze and solve this dilemma. Deloitte wanted to stay in the core downtown market, but options were limited in projects that could accommodate a business, retail, hotel and residential component. Based on Chris’ expertise in Downtown Miami and Brickell, located two options that were existing and 2 options that were just under construction which were viable options for Deloitte. After the intial tours, it was determined by Deloitte that they wanted to be in one of the new locations and narrowed their search to just 600 Brickell and Met2. The issue now became a timing one as Deloittes’s current lease expired 12 months before the delivery of the new projects. In the end, Chris was successful in driving a concession package for Deloitte at MET2 that was unprecedented in the market and based on his strong relationship with the ownership of their current building was able to sign a pre-negotiated 12 month holdover to coincide with their new 12 year lease at Met 2 and Deloitte was able to relocate to a true live, work, play environment.

AON, Miami

Challenge:

AON had been in occupancy at 1001 Brickell Bay Drive for many years and their lease was coming up for renewal in 24 months. AON had naming rights on the top of the high rise and needed to reduce costs and downsize their current occupancy without losing any of their benefits as the anchor tenant.

Result:

AON engaged Chris Coots to renegotiate their lease and long term renewal. It was Chris’ plan and objective to use the down market to their advantage and was able to reduce AON’s current space by roughly 20% immediately, re-cast their rental rate immediately to adjust to current market rents, reset the base year and provided AON a substantial tenant improvement and free rent abatement package all in exchange for a long term extension of their lease. AON was able to downsize immediately and dramatically save money 2 years in advance on the new reduced rental rate and lower square footage, all without losing any of the previous concessions allotted and were able to keep their naming rights status on the top of the building, which was exactly what the Insurance giant was looking for.