Cooke, Young & Keidan LLP is a leading boutique firm of commercial disputes lawyers. CYK specialise in undertaking substantial English Court litigation, international arbitration and alternative dispute resolution, working for businesses in the UK and abroad as well as for high-net-worth individuals.
Brief
Faced with a lease expiry in twelve months’ time in a building earmarked for redevelopment and in a state of obvious managed decline by the landlord, CYK turned to McCalmont-Woods for help in acquiring new office premises in the City of London. The brief was to acquire office space that would be of a much higher quality and more efficient to occupy than existing, while at the same time providing CYK with room to accommodate future business growth.
Since CYK wished initially to consider the merits of relocating across a wide geographical area, a relocation plan and timetable was formulated which enabled CYK to consider the merits of 50 available properties before a longlist of potential options was eventually decided upon. Various on-site inspections were then undertaken to narrow down the search focus to a shortlist of preferred property options.
An option to acquire premises which had been pre-fitted for another law firm was discounted after pre-acquisition due diligence surveys revealed the existing M&E services were no longer fit for purpose and the extensive internal partitioning in-situ did not provide sufficient sound attenuation for a law firm. Consequently, focus shifted rapidly to a consideration of other suitable potential Plan B options identified during the initial research phase which importantly, could be leased and fitted-out from new within CYK’s proposed acquisition timetable.
Outcome
McCalmont-Woods successfully concluded negotiations for CYK to acquire 11,000 sq ft of newly refurbished Grade A offices at 21 Lombard Street, EC3 on a new 7 year sublease from UBS producing £1.16 million cost savings for the business. CYK’s new office premises enjoy natural light to all elevations and following a high-quality fit-out, provide CYK with prestigious modern offices including extensive meeting room space and a roof terrace, arranged on a efficient single floor in the heart of the City.
The transaction highlights two important issues for corporate occupiers:
1. there is a natural assumption that pre-fitted offices will deliver significant cost-savings but this can be a false assumption particularly if the condition of the base build services infrastructure is poor and replacement parts are difficult to source or obsolete. Any assessment of the efficacy of acquiring pre-fitted offices will depend upon the quality and state of repair of the existing fit-out. When considering the acquisition of pre-fitted offices we recommend corporate occupiers undertake all necessary due diligence surveys early on in the acquisition process (and before heads of terms are agreed) as this will influence lease negations and determine whether they should continue or be terminated.
1. by identifying potential Plan B property options at the outset of the relocation process it was possible to effect a rapid change in the direction of lease negotiations without impacting the timetable for acquisition. This is incredibly important if the catalyst for relocation relates to a lease expiry event.
