FMC wanted a new, dynamic office headquarters that would raise the company’s profile, but they were not willing to pay too much of a premium over existing buildings for this 275,000sf requirement.
The rent proposed by the developer, Brandywine Realty Trust (“BRT”), for its proposed tower, Cira Centre South, was too expensive because it was based on a percentage of the average cost/sf to develop the new building. Brandywine dug its heels in and said if it could not get its required return on investment, it was not interested in doing a deal with us. During negotiations, Brandywine shared that they were prepared to build the building with or without FMC, so they needed a final answer quickly in order to properly size the building. Everyone thought the deal was dead. But we were not ready to give up.
Armed with the knowledge that Brandywine was committed to building a smaller building without us, we had our construction consultants determine the marginal cost of “growing the building” by 11 floors to accommodate FMC. The analysis revealed that the incremental cost of adding these floors was appreciably less than the average cost of the overall project. By presenting FMC’s 11 floors as a separate investment from the remainder of the project they had already committed to, we helped persuade BRT that they only needed to achieve their required rate of return on this incremental cost and not on the higher, average cost of the project. As a result, the rent Tactix negotiated for FMC is 30%-40% less than what the other building tenants are paying and not much more than what FMC would have paid in an existing, older trophy building in Center City.
Tactix was also able to negotiate prominent building signage (22’ high letters!) and naming rights for FMC thereby transforming them into a household name in Philadelphia. FMC also continues to benefit from the flexibility Tactix helped secure as they have seamlessly contracted and then grown their space within the first 5 years through contractual rights in their lease.