Situation

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An Ohio based private equity firm owned a specialty chemical business, Zinkan Enterprises Inc., whose lease was expiring in the upcoming year.  Zinkan’s Ohio operations, which also serves as the corporate headquarters, had occupied its 15,000 square foot building for the past 11 years.

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Challenges

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The Zinkan facility was owned by former operating partners and there was sensitivity to continue amicable relations with the prior owner.  Yet, the personnel and operational needs of the business had somewhat changed, and the building layout and functionality were no longer ideal.  Still, the new owners did not want the disruption of moving and had planned to renew the lease directly with the former owner landlord.

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Weber Wood Medinger/CORFAC International was provided an introduction to the operating company to analyze the situation and provide guidance.

 

 

Results

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WWM reviewed the lease document and investigated the market for leased and owned buildings in the area.  The results of the market review indicated that the company had been paying over-market rent on their lease.

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Property visits were arranged with senior management to tour potential relocation facilities and educate the leaders of the company about alternatives in the marketplace.  WWM identified cost savings opportunities and facilities that would offer operational efficiencies.  Requests for proposal were sent to 4 potential relocation candidates and to the existing landlord.  All RFP’s had identical parameters in order to equally measure the responses.

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WWM’s RFP process generated compelling opportunities for relocation into similar sized spaces for significantly less annual cost, larger facilities presenting opportunity for expansion at less annual cost than existing, and remaining in the existing facility at significantly less cost.

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The decision was made to remain in-place and retrofit the premises to better accommodate the current business needs.  Zinkan’s new lease also provided the renovation funds to improve the interior functionality of the facility.  Ultimately, WWM helped Zinkan save 52% over their previous annual lease cost, which represented just over $400,000 over the new five year lease term.