Background

 

Unisource Worldwide, Inc. (now Georgia Pacific Paper Company) was spun off by Alco Standard. It is the largest paper distribution firm in North America with revenues in excess of $7 billion. We were recommended to Unisource both by its outside counsel and by a Board of Directors member, each of whom are clients of REIS.

 

Requirement to Move

 

Since Alco (renamed IKON) had sold its former headquarters building, Unisource was required to move. The suburban Philadelphia market was very tight, especially for headquarters-quality space. Unisource asked us to look at new construction as well as existing space, but to try to keep as close to the current location as possible to minimize the dislocation to its employees.

 

Select New First Class Build-To-Suit

 

We located several alternatives in existing space, but Unisource elected one of our new construction alternatives. Working through the economic and non-economic issues of a new building is quite different than leasing existing space. Most notably, we needed to ensure that the developer would actually build the structure that Unisource envisioned. Then we had to integrate the construction of the tenant improvements with the base building to make sure that no gaps existed.

 

REIS Prepared Base Building Specifications

 

The developer did not have base building specifications. While negotiating the lease parameters, we continued to press the developer for a detailed description of the base building shell that we could attach to the lease. This is especially important so that we knew where we needed to spend tenant improvement funds and what was supposed to be the base building obligation of the landlord. For example, we needed to determine how far the landlord would be required to install the HVAC duct work before the tenant assumed responsibility for the construction to the diffusers, and which party would be responsible for enclosing the interior building columns with drywall. The details were endless and complex.

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The suburban Philadelphia market for class “A” space was very tight, commanding premiums and escalating rapidly. The economics that we achieved for Unisource on a long term build-to-suit was more than $2.00 per square foot under the market for comparable space by the time the company moved in, and they had a building custom designed and fitted for their needs.

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Finally, as the lease document was nearly negotiated, the developer produced a two page exhibit that purported to describe the building. We strongly recommended to Unisource that a more detailed description was needed. They agreed, but since none existed, we undertook to produce the document ourselves, based on our experience as developers and construction administrators and the developer’s oral description of the building it intended to construct. The result was a seventeen page description that was adopted by the landlord with comparatively few changes. We understand that the developer used the same format for many other lease transactions.

 

The Need for Temporary Space

 

Because of the length of time required for construction, we needed to find temporary space for the corporate headquarters. We located sublease space at extremely favorable rates that was very short term, but enough for our needs. Furthermore, the building was very well suited to Unisource’s temporary needs and reasonably close to the existing building. We then arranged for moving services and oversaw the move, which went flawlessly. The final move to the new building was completed and also was seamless in every respect.

 

Third Assignment, Relocate Two Other Departments in Six Weeks

 

Unisource, which has sophisticated real estate people on staff to oversee millions of square feet of office and warehouse space throughout North America, followed up with another assignment of relocating its Information Technology and National Accounts departments to 35,000 square feet of new space. The IT Department was being pushed out of space that it shared with IBM, a vendor, and needed to relocate and be fully operational within six weeks. We found superb substantially “as is” space in a first class building with a landlord willing to pull all the stops to make Unisource’s timing. We did it. Following the move, the space was beautiful, very functional and at rents that are well below their budget for the relocation, especially in the tight market for space we were in.