U.S. Secret Service (USSS)

Background

The building owner had an upcoming lease expiration for a 76,200 RSF lease with the U.S. General Services Administration (GSA) for the U.S. Secret Service Chicago Regional field office. While the Secret Service had been tentatively identified for relocation to a nearby federal building, there were indications that the Secret Service wanted to stay in place following the expiration of the current lease term. Ownership retained CBRE FLAG to assist it navigating the renewal process in the face of the possible relocation of the agency to federal space.

Challenge

To understand the risk of relocation to the federal building, CBRE researched the status of the needed renovations of the federal building that had been identified as the potential relocation location. CBRE learned that the funding for both the renovation and the relocation had yet to be approval and was unlikely to be approved in the near term.

With this knowledge, CBRE FLAG worked with the Building Owner to develop and submit an unsolicited proposal to GSA three years prior to lease expiration. The unsolicited proposal caused GSA to realize that renewing the lease was its best option to meet the long-term facility needs of the Secret Service in Chicago and to seek the necessary approvals to pursue a 15-year succeeding lease.

CBRE FLAG had to strategically structure the unsolicited proposal to maximize the value of the lease renewal while not overplaying the Lessor's hand and pushing GSA to run an open-market competition. Chicago was and continues to be a tenant favorable market and an open market competition could have significantly reduced the value of the lease.

How CBRE created advantage

CBRE FLAG accurately priced the unsolicited proposal not only taking into account current market conditions, but more importantly taking into account the significant investment the tenant had made in the space and the unusually high cost the Government would incur relocating the tenant agency and replicating the space. The unsolicited proposal resulted in the Government completing a sole-source lease procurement with the building owner. The final lease was consistent with the unsolicited proposal with a rental rate with an upward adjustment that included the cost of additional tenant improvement funding the Secret Service requested to modify a small portion of its space. The lease was accretive to the building and helped the Building Owner meet its goals of disposition of the building.