CoStar compiles news of corporate expansions, relocations, extensions, closures, layoffs, lease cancellations and mergers in the weekly Lease Up/Lease Down news report, a concise read keeping you updated on major corporate moves affecting commercial real estate, and can also be a valuable source for business leads.
In this week's issue:
UBS renews and consolidates in the Windy City
The Postal Service discusses its future
Headlee attempts to hang onto some leases
Expansions, Relocations & Extensions
UBS Renews, Consolidates in Chicago
UBS is extending its stay at One North Wacker Drive in Chicago, also known as the UBS Tower. The Swiss financial services firm has renewed for 400,000 square feet in the office tower, a total of 13 floors.
The 10-year lease, set to commence in 2012, is a bit of a consolidation for UBS, as the firm is shedding about 60,000 square feet in the building. Additionally, UBS plans to relocate its offices at 181 W. Madison St. to One North Wacker in 2011.
Both actions represent a downsizing of 116,200 square feet, according to CoStar information.
Still, the renewal is good news for UBS' Chicago employees. A source close to the deal said that UBS was considering moving its operations to its New York offices. CoStar Tenant data shows UBS' Manhattan office footprint to be about 1.6 million square feet.
UBS currently employs about 1,200 people at One North Wacker.The 51-story, 1.4 million-square-foot office skyscraper was built in 2001, across from the Civic Opera House.
Hines acquired the building in 2008 for $540 million, or about $400 per square foot. Currently at 98 percent occupancy, additional tenants include PricewaterhouseCoopers, Barnes & Thornburg and The Options Clearing Corp.
Jack Keenan and Robert Schmidt with Jones Lang LaSalle represented UBS in the lease. Tom D'Arcy, Tom Irvine and Agnes Olejniczak represented Hines, in-house.
CBS Renews 108,000 SF at IFF Bldg
By Sean Glenn
CBS Broadcasting signed a 107,726-square-foot renewal at the International Flavors & Fragrances Building in New York. The network will continue to occupy the ground and second floors, as well as the lower level, for the next 10 years.
The 10-story, 368,195-square-foot office building at 521 W. 57th St. was built in 1938 in the Columbus Circle submarket. Additional tenants include International Flavors & Fragrances, The Multiple Sclerosis Research Center of New York (MSRCNY) and Genzyme.
CBS was represented in-house by Mary Corio. Mark Stein and Farrell Virga represented the landlord, Meringoff Properties, in-house.
Board of Equalization Signs 80,000-SF Lease
By Eric Kies
The California State Board of Equalization leased 80,000 square feet at 621 Capitol Mall in downtown Sacramento. The 10-year deal leaves only 20,000 square feet of new office space on the top floor of the 25-story building.
Completed in 2008, the 366-821-square-foot, Class A office features a seven-story, glass-walled atrium lobby with ground floor retail. Tenants in the building include U.S Bank, Downey Brand Seymour & Rohwer and the California Court of Appeal, 3rd Appellate District.
Devon Atlee of Cornish & Carey represented the board. Jim King and William Swettenham of CB Richard Ellis represented the landlord, David S. Taylor Interests Inc.
QuinStreet Takes 64,000 SF at Metro Center Tower
By Alexis Van Noy
QuinStreet, a Delaware-based vertical marketing company, signed a 63,998-square-foot lease for eight years at the Metro Center Tower in Foster City, CA. The firm will occupy floors four through six in November.
The 21-story, 384,291-square-foot office building is at 950 Tower Lane. It was built in 1986 and is part of the multi-building Metro Center which totals approximately 800,000 square feet.
Michael Moran, Ben Paul, Clarke Funkhouser and Kevin Waldman of Cassidy Turley BT Commercial represented CA-Metro Center LP, the owner. Jere Hench of Colliers International represented QuinStreet.
RB Dwyer Renews 104,000-SF Lease in Anaheim
By Amber Jagers
RB Dwyer Co. has renewed its full-building lease at 2881-2899 Miraloma Ave. in Anaheim, CA. The leader in tamper-evident packing materials will continue to occupy the entire building on a seven-year, $5.4 million lease.
The 104,000-square-foot of distribution facility was built in 1990 in the Placentia West Industrial submarket. It is near the crossroads of the 57 Freeway and the 91 Freeway.
Michael Hefner and Michael Vernick of Voit Real Estate Services represented the lessor, MS Partners. Ben Seybold and Sean Ward of CB Richard Ellis represented the tenant.
"Preemptively modifying existing lease terms in exchange for a longer-term tenant commitment is a strategy being implemented by many property owners who want to proactively avoid a vacancy in today's market," said Hefner.
The American Health Lawyers Association signed a deal for the same floor in the same central business district building where it leased space more than 20 years ago. The group will occupy 11,072 square feet, or the entire sixth floor at 1620 Eye St. NW in Washington, DC. The 10-story office building, located around the corner from the White House, was recently renovated. The U.S. Conference of Mayors, Mobile Video Services Ltd. and Update Legal Staffing are some of the tenants in the building. Tom Golsen and Carroll Cavanagh of Jones Lang LaSalle represented TF Cornerstone, the building's owner, and Tom Fulcher and Adam Brecher of Studley represented the AHLA. (By: Rebecca Payne)
Baxter-Harriss Co., a North Carolina-based logistics firm, signed a three-year lease for about 70,249 square feet at 4441 W. Polk St. in Phoenix. The 91,281-square-foot manufacturing building was constructed in 1985 in the Papago Industrial Park. DATS Trucking is one of the tenants. Gary Anderson and John Pompay of Cassidy Turley BRE Commercial represented the tenant. Anthony Lydon, Marc Hertzberg and Ariana Kirsch represented the landlord, Columbia Industrial Properties. (By: Dale Zavodsky)
Bellevue Art and Frame, a retailer that specializes in art supplies, picture framing and art classes, has signed a 10-year lease for 15,803 square feet at 13131 N.E. 20th St. in Bellevue, WA. The two-story building was constructed in 1985 and has frontage on Northeast 20th Street and 132nd Avenue Northeast. It is in the Suburban Bellevue submarket. James Reed of AGM Inc. represented the landlord, Eastside Harley Davidson. Doug Plager of Wallace Properties Inc. represented Bellevue Art and Frame. (By: Linda Oftedahl)
The Broadway League, the national trade association for the Broadway industry, signed a 10,800-square-foot lease at 729 Seventh Ave. in New York. The long-term deal is for the entire fifth floor. The 18-story, 163,400-square-foot office building was built in 1984 in the Times Square submarket. Additional tenants include the Actors Fund and TDI Inc. Mark Stein and Jason Vacker of Meringoff Properties represented the landlord, in-house, as well as The Broadway League. (By: Delphine Thomas)
Communication Resources Inc. has committed to 13,329 square feet at 1433 Route 34, Building B in Wall Township, NJ. The tenant renewed the 5,762 square foot space it currently occupies and also signed for an additional 7,567 square feet. The facility totals about 25,000 square feet, and is one of three flex buildings in Central Monmouth Business Park. It features private entrances, highway signage and is conveniently located within minutes of I-95, the Garden State Parkway, and Routes 33, 18, 66 and 35. Erin Moran and John O'Hearn represented the landlord, Mack-Cali, in-house. (By: Nashira Smith)
Lewis Brisbois Bisgaard & Smith LLP signed a 10-year lease for 29,940 square feet at 701 B St. in downtown San Diego, also known as Merrill Lynch Tower. The law firm, which is relocating from 550 Corporate Center in the second quarter, is taking the entire 19th floor as well as a portion of the 18th. The 24-story, 560,329-square-foot office tower was built in 1982 and received renovations in 1998. Tenants include Merrill Lynch, Alliant Insurance Services and Sparber Rudolph Annen, according to CoStar information. Matthew T. Carlson and J.P. Huntington with Cushman & Wakefield represented the landlord, Trizec 701 B Street LLC. Andrew Ewald with Cassidy Turley BRE Commercial and Clayton Hovivian with Grubb & Ellis represented the law firm.
The New York School Of Interior Design signed a 20-year, 40,000-square-foot lease at 401 Park Ave. S. in New York. The 13-story, 221,116-square-foot office building was built in 1910 in the Gramercy Park submarket. Mark S. Stein and Jason Vacker represented the landlord, Meringoff Properties. Neil Lipinski, Tim Kucha and David Lebenstein of Cassidy Turley represented the tenant. (By: Delphine Thomas)
Science Applications International Corp. (SAIC) signed a three-year renewal for 22,781 square feet at One River Centre, Building II in Red Bank, NJ. Located at 331 Newman Springs Road, the four-story, 214,518-square-foot office building was built in 1985. One River Centre is made up of three Class A office buildings and one industrial facility. The complex is in close proximity to Route 18. SAIC is an engineering, scientific and technology applications company. Erin Moran and John O’Hearn, both directors of leasing, represented Mack-Cali, in-house. SAIC was represented by Steven Fleming of Jones Lang LaSalle. (By: Jenny Ham)
Total Renal Care Inc. signed a 15-year lease for the entire building at 150 S. Valley View Blvd. in Northwest Las Vegas. The total value of the lease was reported to be $3.38 million. The 11,995-square-foot medical office facility was built in 1985, adjacent to Meadows Mall. Total Renal Care is a subsidiary of DaVita Inc. Jared Chupaila of General Growth Properties represented the landlord, Meadows-Zim LLC. Bruce Follmer and Carla Cole of CB Richard Ellis represented the tenant. (By: Justin McClure)
Woodgrain Distribution, a logistics company, signed a multi-year lease deal for the entire building at 6280 Best Friend Road in Norcross, GA. The distribution building totals 160,440 square feet in the Norcross-Southern Industrial Park. Dave Watson, Darren Ross and Nick Faber of Grubb & Ellis represented DCT Industrial Trust. Tommy Hiles with Bull Realty represented Woodgrain Distribution. (By: Bart Sands)
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Closures & Layoffs
10-Year Plan Indicates Post Office Closures
Faced with a probable $238 billion shortfall over the next 10 years, the United States Postal Service has outlined a new plan to cut costs and return the agency to long-term profitability.
The Postal Service's new plan outlined several additional actions to combat this shortfall, the most glaring of which involve closures, layoffs and rate increases.
Anticipating a drop in activity that would see mail volume fall from 177 billion to 150 billion in the next 10 years, the Postal Service has considered more than 50 possible strategies to combat surmounting issues. Mail volume continues to decrease (in particular, first class mail is expected to drop 37 percent), while health care and delivery costs continue to rise.
"The crisis we’re facing gives us an historic opportunity to make changes that will lay the foundation for a leaner, more market responsive Postal Service that can thrive far into the future," said Postmaster General John E. Potter.
No action would be the most costly action of all, USPS said. Keeping things status quo would likely result in the aforementioned $238 billion shortfall by 2020. The Postal Service said it believes it can save about $123 billion over this period of time by eliminating hundreds of work hours and aggressively controlling costs. But that still leaves a $115 million loss unaccounted for.
USPS plans to invest more in its self-service kiosks and website, as well as provide more services at retail locations such as grocery stores, pharmacies and office supply stores. This will likely lead to the agency
closing many of the 170 post office locations that it said were under review last year.
Additionally, the Postal Service mentioned that it would be establishing a "smaller, leaner workforce," through labor negotiations and likely retirements. More than 300,000 of its employees become eligible for retirement in the next 10 years.
A price increase has also been proposed for 2011, which is proving to be unpopular with consumers. The Postal Service also said it would base prices for market dominant mailing products on overall demand, rather than capping each individual mail class.
A restructuring of employee health benefits and retirement funds has also been discussed, as well as cutting Saturday mail delivery.
"Lifestyles and ways of doing business have changed dramatically in the last 40 years, but some of the laws that govern the Postal Service have not," said Potter. He stressed that these laws need to be updated, to reflect changes in America's business culture and technology.
SuperValu Cutting Nearly 1,000 Connecticut Jobs
Grocery retailer SuperValu is selling its Shaw's Supermarket locations in Connecticut. According to the state WARN report, 967 employees will lose their jobs.
Shaw's locations in Clinton, Hartford, Fairfield, Manchester, New Haven, Southbury, Wallingford and Willimantic are scheduled to close on March 31. Curiously, the layoffs are to occur two weeks later, on April 13.
Wakefern (ShopRite, PriceRite) and Stop & Shop are reportedly buying up the majority of the stores. There is a good possibility that the Shaw’s employees at these locations will be rehired.
Less optimistic are the 257 employees at Shaw's New Haven and Manchester stores. As of yet, these stores do not have a buyer.
Peter Van Helden, executive vice president of retail operations at Supervalu, said the sale of the Connecticut stores was difficult, but would "ultimately allow us to operate more efficiently and effectively within a highly competitive retail environment."
William Blair & Co. is advising Supervalu in the divestiture.
| Company | Address | Closure or Layoff | # Affected | Impact Date | | Shaw's Supermarket | 265 E Main St, Clinton, CT | closure | 109 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 31 Main St, East Hartford, CT | closure | 120 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 1975 Black Rock Tpke, Fairfield, CT | closure | 125 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 425 Broad St, Manchester, CT | closure | 110 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 150 Whalley Ave, New Haven, CT | closure | 147 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 775 Main St S, Southbury, CT | closure | 137 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 846 N Colony Rd, Wallingford, CT | closure | 133 | 3/31/2010-4/13/2010 | | Shaw's Supermarket | 60 Cantor Dr, Willimantic, CT | closure | 86 | 3/31/2010-4/13/2010 | | Best Buy | 8875 N 76th St, Milwaukee, WI | closure | 62 | 5/8/2010 | | Bourns, Inc. | 3200 Palmer Dr, Janesville, WI | closure | 30 | 5/7/2010 | | Electric Boat | 75 Eastern Point Rd, Groton, CT | layoff | 395 | 4/2/2010 - 1/1/2010 | | Hoffman-La Roche, Inc. | New Jersey | layoff | 500 | 6/30/2010 | | Allied Systems | 300 Victoria Ter, Ridgefield, NJ | layoff | 78 | 4/1/2010 | | Cosmetic Essence, LLC | 303 North St, Teterboro, NJ | layoff | 167 | 4/30/2010 | | Dow Jones | 890 Ridge Rd, Monmouth Junction, NJ | layoff | 47 | 4/30/2010 | | Sony Music Holdings, Inc. | 400 N Woodbury Rd, Pitman, NJ | layoff | 162 | 4/30/2010 | | CCH Small Firm Services | 7305 Commercial Circle, Ft. Pierce, FL | closure | 67 | 5/1/2011 | | Cintas Corp. | 6800 Cintas Blvd, Mason, OH | layoff | 55-60 | immediately | | Hugo Boss Cleveland, Inc. | 4600 Tiedemann Rd, Brooklyn, OH | closure | 338 | 4/28/2010 | | Denman Tire | 400 Diehl South Rd, Braceville Twp, OH | possible closure | 265 | 4/20/2010 | | Denman Tire | 600 S Meridian Rd, Austintown, OH | possible closure | 10 | 4/20/2010 | | Worldcolor Oberlin | 235 Artino St, Oberlin, OH | closure | 119 | 5/21/2010 | | Decrane Aerospace Precision Patterns | 225 Bourne Blvd, Savannah, GA | layoff | 90 | 5/8/2010 | | Lear-Siegler Mobility Center | 333 Panther Creek Dr, New Boston, TX | layoff | 100 | 3/26/2010 | | Convergys Customer Management Group | 4501 Roy J. Smith Dr, Killeen, TX | layoff | 150 | 5/26/2010 | | Research Analysis & Maintenance (RAM) | 9440 Viscount Blvd, El Paso, TX | layoff | 104 | 4/30/2010 | | CACI Technologies | Fort Bliss, TX | layoff | 264 | 5/1/2010 |
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Lease Cancellations
Headlee Management Corp. has requested more time to reject or assume six commercial leases, which it considers to be integral to its business. The leases in question include three Buffalo Wild Wings franchise restaurants, two Kentucky Fried Chicken franchises and the Headlee's corporate headquarters. The cancellation of these leases would cause "enormous financial disruption" to the bankrupt company's restructuring efforts, according to case documents. The restaurant operator terminated three Arby's franchise leases when it filed for Chapter 11 on December 8, 2009.
| Company | Address | Affected Parties | Comment | | Headlee Management Corp. | 1450 Route 300 LLC | 1450 Route 300 LLC | Headquarters lease, exp. 9/1/2010, rent: $5,000/mo | | Headlee Management Corp. | 7971 Vaugh Rd, Montgomery, AL | Festival Plaza, LLC | Buffalo Wild Wings, exp. 2/17/2015, rent: $12,500/mo. | | Headlee Management Corp. | 4101 Denny Ave, Pascagoula, MS | Equity One, Inc. | Buffalo Wild Wings, exp. 9/30/2015, rent: $8,700/mo. | | Headlee Management Corp. | 1300 Ulster Ave, Ste 310, Kingston, NY | PCK Development Co., LLC | Buffalo Wild Wings, undated 10-year lease, rent: $15,900/mo. | | Headlee Management Corp. | 171 N Plank Rd, Newburgh, NY | Mid Valley Discount Mall Associates | Kentucky Fried Chicken, exp. 9/30/2014, rent: $4,400/mo. | | Headlee Management Corp. | 490 SR 211 E, Middletown, NY | Middletown Plaza Associates LP | Kentucky Fried Chicken, exp. 11/14/2015, rent: $12,300/mo | | Headlee Management Corp. | New York SR 32, New Windsor, NY | Petro Metals, Inc., North Plank Development Co. | Ground lease, Arby's, rejected 12/8/2009 | | Headlee Management Corp. | 1491 Route 9, Wappinger, NY | Jack Davis | Arby's, rejected 12/8/2009 | | Headlee Management Corp. | 20 Massa Dr, Kingston, NY | Florida Samas Venture, Inc. | Ground lease, Arby's, rejected 12/8/2009 |
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