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IBM Philippines: Exploring Bundled Renewal For Its Buildings

01 THE CHALLENGE

IBM Philippines leased offices in UP Ayala (UPA) Technohub's Buildings E, J, and M. The contracts for these would expire in December 2017, March 2018, and March 2020, respectively.

IBM initially planned to renew its leases separately. However, Building E's negotiations created an opportunity for a bundle renewal. This option did present some challenges though. The landlord required an early renewal of a lease expiring two years down the road.

To lower rental rates and get favorable terms, IBM approached Cushman & Wakefield for advice.

02 THE SOLUTION

UPA Technohub's lease renewals were subject to a cap and collar of year one's base rent renewal at no less or more than 10% of year five's current base rent. From this, the landlord was already offering a base renewal rent that is 6% lower than Building E's expiry rent. However, we still explored a bulk renewal to push for better prices and terms.

For IBM's review of options and related costs, our team prepared 10 scenarios, including, among many others:

  • Separate renewals upon expiry
  • Bundle renewal for full five years
  • Bundle renewal with the same expiry date

03 THE RESULT

IBM got a bulk renewal that is 15% lower than all its leases' average expiry rents. IBM enjoyed lower rates from the early renewal. It closed a deal that is lower than the market's yearly increase of 3% to 5% and better than the yearly standard increase of 5% to 10%.

Meet the Team

Paolo-Matibag_02
Paolo Matibag

Assistant Leasing Manager
Taguig, Philippines


+63 (2) 8554 2996

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Kimberly Puso

Facilities Coordinator
Taguig, Philippines


+63 (2) 8554 2927

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Raylyn Raflores

Analyst
Taguig, Philippines


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WE’RE ON HAND TO HELP

Contact us to discuss how our experience on this project could be translated to your business requirements.

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