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Office Depot Picks Boca Raton over Chicago for Corporate HQ

Former OfficeMax HQ in Naperville Could Face Prospect of Being Vacated
December 11, 2013
Office Depot Inc. has chosen Boca Raton, FL, for its global headquarters, picking the existing Office Depot headquarters over its newly acquired OfficeMax headquarters in the suburbs of Chicago.

Although the decision was not a surprise, Office Depot was careful to note the decision followed a thorough evaluation that took into account a number of factors, including the cost to operate each headquarters location, lease obligations and sublease considerations, tax implications, government incentives, ability to add associates and incorporate functions in the current space, and people-related costs, the company said.

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"Both Florida and Illinois have many positive attributes, but our analysis concluded that Boca Raton provides the best platform for us to achieve planned synergies, leverage assets to drive improved profitability, and launch a compelling vision for the future," said Roland Smith, chairman and CEO of Office Depot.

The company's current 625,000-square-foot corporate campus at 6600 N. Military Trail in Boca Raton has ample space to accommodate associates who will relocate from Illinois.

The decision likely means that Office Depot will eventually vacate its 354,000-square-foot office building at 263 Shuman Blvd. in Naperville, IL, that served as the headquarters for OfficeMax, according to CMBS analysts with Nomura Securities.

The Naperville location serves as collateral for the $49 million OfficeMax headquarters loan securitized in MLMT 2007-C1. The loan remains current and is due to mature in July 2017, two months after OfficeMax’s lease is set to expire. The loan sponsor, Columbia Property Trust, has several years prior to loan maturity to find a replacement for this single-tenant office building.

Naperville has a 15.3% vacancy rate, which is projected to decline to 14.7% by 2017, according to CoStar information. Rents are currently $18.02/square foot and projected to rise to $21.69 by 2017.

For reference, the submarket reported 17% vacancy and average rents of $18.94/square foot in the second quarter of 2007, at the time the loan was originated.

Office Depot and OfficeMax retail store locations, customer service centers, warehouses and distribution centers are not affected by the selection of the headquarters location.

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