Earlier this year, Banco Itau acquired ABN Amro as part of the acquisition group led by Royal Bank of Scottland. ABN Amro's existing lease was for 35,000 sf and was to run through 2012. As part of the transaction, Banco Itau also added approximatelY 3,000 sf.
Representatives of Wachovia Financial Center herald the renewal as a show of support for the 1984 built office building, even with three new Class A office buildings being built in the Miami CBD. However, the real key to the key to the deal may have been the building's ability to provide a new tenant improvement allowance now as part of the early renewal. Rather than simply wait until the end of its existing lease term, Banco Itau reportedly was eager to change its image from the ABN Amro standards to its own corporate image.
That decision may have been an expensive one. According to GlobeSt.com, the Banco Itau lease was valued at approximately $25M for the 10 year deal. That number seems very high. But if it is correct, that works out to an average of $65.50 per square foot.
When compared to recent deals done at the new Class A buildings with sub $40 psf starting rates and three percent annual escalations, the decision may have added a premium of $15 per square foot or more to Banco Itau's rent. That's about $570,000 a year or about $5.7M total.
But that is what happens when companies represent themselves in lease transactions. The landlord has professionals with many years of experience and great market knowledge. Even the most sophisticated companies are at a disadvantage when they do not have the same.
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