By CYRIL TUOHY, managing editor of Risk & Insurance®
So you want to pick up some office space for cheap in a dismal real estate market? And how about slapping your brand on the most recognizable building in America?
Talk to Joe--Joe Plumeri, CEO of the storied London-based global broker Willis Group Holdings Ltd.
He recently managed to snag 150,000 square feet in the tallest building in the Western Hemisphere and convinced the landlords to slap his company's name on the 1,450-foot-tall skyscraper to boot.
Here's how the deal went down--or up, depending on your point of view.
Following the closing of the Willis purchase of Hilb Rogal Hobbs last October, Willis was looking to herd about 500 brokers working in the Chicago area into one office building from a handful of locations scattered about the Windy City.
That made sense, as it was more efficient to centralize the company's Chicago operations. The only question was where?
Willis sent its real estate agent on the hunt, with instructions to report back at weekly intervals. Every Monday, agents met with Willis' insiders charged with finding new space. Willis, like everyone else, was well aware that there were entire floors going empty in the Sears Tower because the retailer had long ago vacated the building for cheaper land outside of town.
At first Plumeri wasn't interested and certainly not at $26.00 a square foot--which by the way is peanuts compared with London, where Willis leases most of the 475,000 square feet available at 51 Lime Street, the address of the firm's global headquarters.
So away went the real estate agents to look for other space.
LET THE FIRE SALE BEGIN
Again, they came back to the Monday meetings with more options. And again, the space in the Sears Tower was available for the taking--at the bottom of the list. And again, Willis passed.
"Every time we said, 'No,' the owner of the Sears Tower came down," said Don Bailey, CEO of Willis' North American operations, recounting the events leading up to the July dedication ceremonies.
Bailey spoke Wednesday during an appreciation dinner for Willis brokers and clients in Burlington, Vt., during the Vermont Captive Insurance Association's annual meeting.
Down, down, down fell the price--$24.50 a square foot, $22.50 a square foot, $19.50 a square foot, $16.50 a square foot. Finally, at $14.50 a square foot, it dawned on Plumeri that the landlord might be getting desperate in a recession-battered market.
The light bulb suddenly went on.
"Will they name the building after us?" said Plumeri, according to Bailey. Off went Willis' real estate broker to ask the bold question ... and the answer was, "Yes."
BROKERING AND TAX BREAK TOO
That's not quite the end of the story, according to Bailey. Plumeri wanted even more.
"Joe wasn't quite satisfied and said we want to be your broker--and they said, 'Yes.' "
In the end, Plumeri locked in the square footage at a fire-sale price, plastered his company's name on the tallest building in America, bagged one of Chicago's biggest commercial real estate agents as a client and extracted a reported $3.8 million tax break from the administration of Chicago Mayor Richard M. Daley.
Seems the market just can't say no to Joe.
August 14, 2009
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