EG&G Renews 30,000 square feet at Comanche Business Park

In October 2011 REA completed a lease renewal for EG&G Technical Services, Inc. (EG&G) at Comanche Business Park. EG&G is a division of URS Corporation that provides engineering, construction and technical services to public agencies and private sector companies around the world. The lease renewal is for approximately 30,000 square feet and for three years. The lease renewal process began with the landlord and the tenant having different requirements and needs; including lease term, timing of renewal and rate. Through REA’s marketing efforts and presentation of current market conditions the transaction was completed to the satisfaction of both parties.

Challenge

EG&G Technical Services, Inc. is a division of URS Corporation. URS Corporation is a leading provider of engineering, construction and technical services for public agencies and private sector companies around the world. EG&G leases approximately 30,000 square feet at Comanche Business Park. The operation of this division is a contractor for the Department of Defense operations at Sandia National Laboratories and Kirtland Air Force Base. These government contracts require an annual termination right. EG&G’s lease was up for renewal, because of the annual termination rights in these government contracts URS Corporate offices insisted on an annual termination right in a lease renewal.

Solution

The owners of the project were faced with a loan that had a balloon payment within 12 months of EG&G’s lease termination. Since EG&G is an anchor tenant of this project, their termination would have a significant impact on refinancing. Due to this financing dilemma for the owner, our market knowledge of limited options for EG&G to relocate and knowledge of potential other users for this space; REA recommended to our client not to accept a lease renewal with a firm term of less than three years even though EG&G indicated they would not be willing to enter into a long term lease. REA implemented a marketing strategy that aggressively marketed this space for other tenants. The marketing strategy generated much interest in the space and secured a tenant to back fill a substantial portion of the EG&G space in the event a lease renewal was not successfully achieved with EG&G. The marketing of the space prompted EG&G to sign a three year lease without termination rights at a rental rate above market for new leases for comparable space.