Background

 

REIS has had a very long relationship with PMHCC, Inc., going back over 25 years to when REIS helped negotiate a lease extension at 123 South Broad Street for PMHCC.  Then many years later REIS, on behalf of another large client, worked with PMHCC to bring PMHCC to the client as a major subtenant.  REIS did not work for PMHCC at that time, but all parties were aware of the relationship.  Over time, however, PMHCC’s sublease was taken over by the building and became a direct lease between PMHCC and the landlord.  Once this occurred, REIS was now able to directly represent PMHCC and so, as PMHCC’s direct lease with the building continued, REIS was given the opportunity to work with PMHCC again to represent them in assessing their ongoing real estate needs.

 

PMHCC is a non-profit organization providing various health and support services to many in the Philadelphia community.  In so doing, PMHCC acts in many ways as an umbrella organization overseeing and managing a number of specialized programs and service providers.  Given this structure, PMHCC faced a number of on-going real estate challenges.  For organizational efficiencies and coordination, program personnel have to be located together. Also, some programs have to be located adjacent to others while others require separation and privacy.  In addition, PMHCC must view and manage the individual programs as separate entities that, while needing a set amount of office space today, may in the future need additional space or may longer need any space.

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The Project

 

Given the complexity of PMHCC’s real estate needs, REIS began its work on the project with over three years remaining on PMHCC’s existing lease.  Knowing the importance of space planning, the first step was to engage a design professional and so REIS arranged to have three architectural firms, each of whom had experience with non-profit organizations, to present to PMHCC, which allowed them to make an informed decision on a design firm.  Construction costs are always a key driver in real estate and so at this point REIS had competitive bidders budget for construction costs and when the low bidder for all options was a construction manager PMHCC determined that was a good approach to have an open budget process.  The team was now in place and the focus was on finding the best option for PMHCC and its personnel; an option that had to meet financial requirements while also providing the significant flexibility desired by PMHCC’s organizational structure.

 

PMHCC has had a very good relationship with its existing landlord, however, given PMHCC had been in place for such a long time, and had experienced growth in its various programs; the existing configuration of its space was not efficient.  Renegotiating its existing lease and staying put was a very viable option and the design team initially focused on ways to reconfigure the space in place, always difficult when major reconfiguration is best for the organization.  However, PMHCC was also hopeful of finding new and modern space for all its personnel and so, in conjunction with the early stay put studies, REIS researched and presented relocation options to PMHCC. 

 

As is often the case, the option to “stay put” would require extensive internal relocations as the construction would have to be phased so as to allow PMHCC to continue servicing its clients.  The option of relocating to new space can impose a significant capital cost to a tenant, above the improvement allowance offered by the landlord, to fully build out the new space to meet the tenant’s needs.   And one other very significant challenge for REIS to overcome was PMHCC’s requirement for flexibility in returning space back to the landlord.

 

Given all the above challenges, REIS issued detailed Requests for Proposals to viable relocation candidates, was able to obtain the flexibility required by PMHCC, and subsequently prepared detailed financial analyses of the responses, with all the analyses incorporating the budgeted costs of construction, move, and some furniture.

 

REIS provided detailed analyses of all options to PMHCC and further assisted PMHCC in preparing its presentation to its Board.  From here, a potential relocation candidate was identified, one that would allow PMHCC to relocate from a Class B building to Class A building featuring new lobbies, a gym and direct access to regional transportation.  Given this direction, REIS helped negotiate terms with the new landlord that not only provided the flexibility required by PMHCC and its funders, but also provided an allowance that met the needs to build out the space.

 

As a matter of protocol, REIS continued its support of PMHCC throughout design and construction of the new premises.  REIS attended all weekly construction meetings, addressed any concerns regarding landlord responsibilities, and assured the project would be complete months ahead of schedule, allowing PMHCC ample time to relocate its furniture and fixtures, and begin its operations in a new and exciting environment.