Strategic Office Restructuring: $11.1 Million Savings in NYC and LA
Introduction
A media company faced significant challenges with their office spaces in New York City and Los Angeles during the COVID-19 pandemic. With changing workspace needs and financial pressures, they turned to Vestian to terminate their NYC lease and restructure their LA lease, after previous attempts at subleasing had failed.
Challenge
Our client needed to quickly reduce their real estate expenses in both NYC and LA due to the pandemic's financial impact. In NYC, they had a $12.6 million lease obligation with 4.5 years remaining on a 26,000 square foot space. In LA, they had a $5.8 million obligation with 2.5 years left on a 22,000 square foot lease, but only needed half that space. Previous attempts to sublease both spaces had been unsuccessful for 9 months, and market conditions were worsening due to the pandemic.
Solution
Vestian developed a strategy leveraging the client's pandemic-related financial impact. In NYC, we negotiated a complete lease termination, reducing the client's obligation from $12.6 million to $4 million, resulting in $8.6 million in savings. For the LA office, we restructured the lease, halving the space from 22,000 sf to 11,000 sf without extending the lease term. This reduced their obligation from $5.8 million to $3.3 million, saving $2.5 million. Our approach eliminated uncertainties associated with subleasing and provided a clear path forward, resulting in significant cost savings and optimized space utilization for the client.
