Transaction Snapshot
Turning Excess Industrial Space and Lease Obligation into $758,700 in Savings
Sometimes business needs evolve faster than lease commitments. After a corporate reorganization left our client with excess industrial/flex space and years remaining on its lease, we developed a strategic sublease solution to better align its footprint with current operations and reduce a significant lease liability.
The Challenge
Excess Industrial Space Driven by Corporate Reorganization
Our client originally signed a 60-month lease for 18,000 square feet of industrial/flex space. Following a broader organizational restructuring, several functions were consolidated into facilities elsewhere in the country, reducing the company’s space requirement to just 30% of its existing footprint. Despite no longer needing the majority of the premises, the client remained responsible for the full lease obligation and nearly four years of remaining term.
Making matters more challenging, the space wasn’t a typical industrial real estate offering. More than 70% of the facility was built out as office area, making it appealing to a much narrower pool of prospective tenants. At a time when much of the market’s demand was concentrated on warehouse-oriented space, successfully repositioning the excess footprint would require thoughtful planning, creative marketing, and a strategy tailored to current market realities.
Our Approach
Laying the Groundwork for Efficient Execution
Rather than waiting for a prospect to dictate the path forward, we proactively developed a strategy designed to maximize flexibility, reduce risk, and accelerate execution.
- Developed a demising strategy up front: We engaged an architect before marketing began to create a proposed floor plan that aligned with the client’s reduced space requirements, allowing us to clearly define what portion of the footprint our client wanted to retain and what area they were looking to sublease.
- Created a market-ready leasing package: We built marketing materials featuring both the existing floor plan and the proposed demised layout, helping tenants and brokers quickly understand the opportunity and available configurations.
- Established construction costs early: We brought in a general contractor to provide preliminary demising pricing, giving all parties a clear understanding of project costs and deal economics from the onset.
- Engaged ownership early in the process: We communicated with the landlord before formal approvals were needed, securing buy-in on the proposed sublet strategy and ensuring consent would not become a roadblock later in the transaction.
The Results
A Right-Sized Footprint and $758,000 in Net Savings
By completing the planning work in advance and coordinating communication among all stakeholders simultaneously, we accelerated an industrial sublease transaction that typically spans several months into just 30 days. This strategic approach enabled the client to retain only the space they needed, transfer the remaining lease obligation to a credit-worthy subtenant, and achieve $758,700 in net savings while maintaining uninterrupted operations.
| FINANCIAL OUTCOME | |
|---|---|
| Gross Savings Over Remaining Term | $898,550.00 |
| Less: Commissions | -$89,850.00 |
| Less: Demising Construction | -$50,000.00 |
| Net Savings to Client | $758,700.00 |
Facing a Similar Challenge?
Let's Evaluate Your Options
Excess space doesn’t always require a relocation or lease termination to solve. With the right strategy, businesses can reduce occupancy costs, realign their footprint with operational needs, and unlock value from existing lease commitments.
Whether your organization is navigating a reorganization, growth initiative, or changing space requirements, Stack Industrial Partners can help evaluate your options and develop a plan tailored to your objectives.
