Zinpro is a 50-year old performance mineral and nutrition company that focuses on research, development & sales of trace mineral nutrition. Its Headquarters are located in a Class A office building in Eden Prairie, MN with an R & D Lab located nearby. While the location is convenient to the Airport and for its employees, Zinpro had outgrown its space at both locations. With nearly two years remaining on its lease term, Zinpro felt stuck in a lease, and in space that was too small. Corporate Tenant Advisors was hired to assist Zinpro with its office space challenges.
The Process and Tactics:
The initial meeting with the executives at Zinpro revealed their need for immediate growth. But with no adjacent space available, it became clear that we needed both short term and long term plans. The short term plan was to place staff into a vacancy on another floor in their building for two years. The long term plan was to eventually relocate to another property that could accommodate their current size and continued growth, yet keep them in close proximity to the R & D Lab. CTA took immediate action, identified acceptable space in the building, and began negotiating with the Landlord, Liberty Property Trust. Liberty took advantage of the position Zinpro was in, and quoted financial terms & conditions that were extremely onerous. "We felt like we were being held hostage, but didn't know if we had another choice", said Zinpro President, Bill Scrimgeour. Zinpro justified the additional costs through a ten-year analysis of amortizing the increase over a longer period of time. We were upset with the Landlord, and asked Zinpro for three weeks to "find another solution before we give in".
With the help of an excellent architect, we found room to comfortably house the staff additions in the current premises, thus buying us more time to come up with a more reasonable solution. Additionally, we identified an excellent long term Sublease opportunity at Centennial Lakes Office Park in Edina where the Landlord was willing to recapture the Sublease space, add on additional term to the new lease, and provide Zinpro with a "turn-key" office solution that accommodated their growth, was less costly than the current space, and provided the first two years of term entirely free!
We told Liberty that we were not going to proceed with the expansion and, in fact, were intending to vacate the current property within the next 4 months. This position completely shocked the Liberty leasing staff, and they called an immediate meeting with CTA and Zinpro executives to discuss a long term solution. We turned the meeting down, thus securing our position of "don't waste our time...there is nothing to talk about." We focused exclusively on closing the deal with Centennial Lakes until one of the Liberty executives sent us an email detailing terms that exceeded all our expectations.
The terms provided for Zinpro were so aggressive that Liberty demanded we sign a Confidentiality Agreement. We received a long term solution that involved relocating the adjacent tenant to another building, and providing Zinpro with more than enough space for its 10-year plan...all together...all on the same floor.
It was this competitive lease environment that provided Zinpro with a better-than-expected outcome. We successfully negotiated with two competitive-set Landlords, each with excellent solutions, but the incumbent Landlord provided the best solution. The lease terms that were ultimately agreed to were a 41% discount from the Landlord’s original offer, which includes free rent and other concessions.
The owners of Zinpro call us “Rock Stars”…we like to call ourselves “The Tenant’s Edge”.
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