We represented Pulte Homes in its World Headquarters relocation to 100 Corporate Center Drive, Bloomfield Hills, Michigan. Initially leasing 34,000 sq. ft. in this Class A three-story 210,000 sq. ft. building, Pulte's occupancy grew significantly over the following years until in late 2004 they found itself occupying over 120,000 sq. ft.—the entire third floor and a large portion of the first floor.
Further, as a result of internal growth plus a major corporate acquisition, Pulte required significantly more space. Unfortunately the only remaining space in the Headquarters building was the 72,000 sq. ft. second floor occupied in its entirety by Butzel Long, a prominent law firm. This was no small problem. Pulte still had seven years remaining on its existing lease and therefore could not move to a new location absent unacceptable financial consequences. For operational considerations Pulte was not willing to divide its Headquarter functions into separate facilities. With Butzel’s second-floor lease having 19-years remaining there appeared to be no solution.
Now here is where Principal Associates stepped up to the plate. After considerable research we formulated a complicated multi-party solution and accepted the "Mission Impossible" challenge to implement our own strategy.
- Butzel must be persuaded to terminate its lease and move to a comparable quality space in another Class A Bloomfield Hills office building on terms more favorable than their present lease afforded. The option offered up included a more efficient space plan at a lower rental rate for a shorter term, with all improvements and moving costs to be paid by the landlord.
- The landlord, Kojaian, must be persuaded to release Butzel from its 19-year lease commitment.
- Pulte and Kojaian must agree on terms for a new long-term lease for the entire 180,000 sq. ft. at 100 Corporate Drive.
- The key was that Kojaian owned another Class A office building in Bloomfield that could house Butzel in 72,000 available square feet.
- Lastly, Butzel and Kojaian must agree on terms for a new long-term lease for approximately 72,000 sq. ft. at 41000 Woodward in Bloomfield Hills.
We provided multiple services to all parties including brokerage, project consulting, and financial analysis. We avoided conflict of interest issues through confidentiality when necessary and full disclosure when possible.
Pulte entered into a new 10-year lease for approximately 190,000 sq. ft. built to its specifications at a reduced effective rental rate. Butzel terminated its 19-year lease and moved to 64,000 sq. ft. built to its specification at a significantly lower effective rate than it had been paying. Kojaian maintained 100% occupancy in 100 Corporate Drive and leased 64,000 sq. ft. at market rates in space previously vacant in another building in its portfolio.
And it only took 19-months to negotiate the contracts and six more months to design, finance, permit, build out and move the parties.
In a front page article, Crain’s Detroit Business described the deals as "trading places" and termed the process as the "creative deal of the year". As an aggregate it was the largest office transaction of the year; in terms of both square footage and rental.
Tenant Representative: Robert Rosman, Senior Consultant, Principal Associates