Dutko Grayling

Client Situation

Dutko Grayling was spread out over several buildings on Capitol Hill. They had over two years remaining on their various suites and needed to consolidate their offices and human resources. Dutko had spoken with numerous other brokerage firms and could not move forward on the space consolidation because of the GAAP accounting effects on having multiple locations under lease.

Consideration & Analysis

Steve looked at the various options for space disposal and consolidation to establish the most favorable cost and accounting treatment. Additionally, there was uncertainty about where to consolidate given various needs and prices in the mix. A new location that met both the operational and cost objectives had to be secured within very narrow constraints. Steve developed a Strategic Real Estate Plan that incorporated space efficiencies, future growth needs, parking, infrastructure requirements, human resources concerns (employee
commute times, environment, etc.), and annual “all-in” costs into the solution.

Results

A detailed space programming exercise revealed that Dutko Grayling could efficiently fit into 25% less space. After a thorough assessment of the market and supporting financial analysis on both cash and GAAP bases, several options were identified offering solutions in line with the strategic plan. The key creative difference was a lease structure where the new landlord actually assumed the old leases directly. Such a structure led to a removal of the lease costs from the books on a GAAP basis and created the flexibility to structure the early move to meet the key financial objectives.

The negotiations conducted by Steve on Dutko Graylings behalf resulted in a very competitive market transaction that included rental abatement and allowances for improvements and furniture. The combination of economics and physical attributes allowed Dutko Grayling to meet all financial objectives, configure the space to best support its needs and allow for growth in close proximity to its workforce.

 

Advisors who worked on this project

Steven Hubberman

Steven Hubberman

Managing Principal & CEO