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 Getty Images retained Plymouth Partners as its advisor/broker to determine if it should consolidate its operations or remain at scattered sites throughout the Midtown South market. After extensive analysis, Plymouth Partners determined that Getty would achieve greater efficiency and cost savings by consolidating, rather than retrofitting its current space and restructuring its leases. During the course of the search for new space, Getty - which had recently bought four of its competitors - set about on a vigorous campaign to become the world’s largest provider of visual content by acquiring even more of its competitors. This growth continued over a period of seven months, ballooning Getty’s needs from an initial 32,000 square feet to 261,000 square feet. Getty’s fifth acquisition was Allsport Photography, at which point Gensler Architects performed a space-planning program. Gensler determined Getty would require approximately 50,000 square feet to integrate all five operations. Armed with this plan, Plymouth Partners focused on locating buildings that would accommodate Getty’s erratic growth by structuring deals that considered future acquisitions. At the same time, vacant space in New York was rapidly disappearing. Dot-coms and financial services firms were expanding and the lag in new construction was finally being realized. A frenzied atmosphere overtook all space searches, and Plymouth Partners and Getty felt the resulting pain. Repeatedly, spaces that Getty visited and liked would be leased even before Getty could make an offer for them. A Deal is Struck …then Killed Plymouth and Getty agreed on a new home at 111 Eighth Avenue. It met all the requirements including image, technology, location and economics. After concluding preliminary negotiations, Plymouth Partners requested that the building owner create leases. The next day, in a questionable move, the owner abruptly gave the space to an existing tenant that had never before been mentioned. Even though Plymouth was dealing with respectable individuals within the brokerage community, the frantic pace of the tight market had created an "un-level" playing field. Plymouth had to back track and re-evaluate all of the viable properties it had examined earlier. By then of the summer, however, there were no remaining 50,000 square foot blocks of space in Midtown South. The time wasted while dealing with 111 Eighth Avenue had frozen Getty out of the market. The collapse of the 111 Eighth Avenue deal looked like a disaster, since Plymouth Partners had already been working on the difficult task of getting Getty out of the leases for the five recently acquired firms. Now, these groups had nowhere to go. Plymouth had already structured an early lease termination for one group (Energy) and passed on the opportunity to renew another group’s (Liaison) lease. Liaison’s lease had expired in June and its Landlord had offered an expensive ten-year deal. To make matters worse, Liaison was under pressure to move out because another tenant had committed for its space as part of a new long- term lease. Despite these circumstances, Plymouth Partners negotiated two separate six-month lease extensions for Liaison, buying time until a site was selected. At this point, Getty had no choice but to move.  Quick
Action Saves The Day Plymouth Partners, moving as quickly as possible, identifies the only remaining spaces available in the marketplace. Both were owned by Trinity Real Estate, an arm of Trinity Church, and were in the up-and-coming Hudson Square neighborhood just west of Soho. In August, negotiations had begun and a verbal agreement was reached: Trinity would take both buildings off the market and Getty would consolidate its operations at one of them. Space in the two properties - 345 Hudson Street and One Hudson Square - was occupied by a variety of firms and would require relocations, buyouts and an incredible amount of wheeling, dealing and juggling by everyone. The entire fifth floor at 345 Hudson Street (56,470 square feet) met Getty’s needs. At One Hudson Square, the entire fourth floor (73,000 square feet) could be available. Trinity agreed that it would buyout or terminate Brand X Editions, Gate Group USA and Callahan Sunders to create 24,734 square feet. It then agreed to buyout Europadisk I & II to create another 36,642 square feet. Once the last tenant (Dean Witter) moved out the floor would be vacant. The Requirement Grows Again The dealing suddenly became even more complicated when Getty acquired The Image Bank, a major competitor, doubling the space requirement to more than 100,000 square feet. Plymouth Partners decided to move forward with One Hudson Square, since this building could accommodate Getty’s sudden growth spurt. In addition to the entire 4th floor, Plymouth began a discussing the vacant 5th floor space. Throughout this process, Getty’s need for contiguous space had to be kept at the forefront. While Plymouth waited for confirmation from Trinity that the tenants were receptive to the buyouts, Getty acquired another competitor, FPG International, which occupied 45,000 square feet in the Union Square neighborhood. Plymouth Partners now had to begin discussions for the entire 6th floor since, after all the acquisitions, there was uncertainty over exactly how much space would eventually be needed. Negotiations for the sixth floor were kept separate from the fourth and fifth floors, since the market had grown even tighter and Trinity was not willing to offer as many concessions now. Shuffling
The Jig Saw PuzzleNow it was Trinity’s turn to juggle. Five tenants whose leases expired at different times occupied the sixth floor. Since Trinity did not want to lose Getty, in entered into agreements with each of the five tenants to either buy them out or move them elsewhere within Trinity’s portfolio. The process of buying out the industrial tenants was very intricate. It was virtually impossible for all of the tenants to vacate at the same times, so Plymouth Partners devised a two-phase move-in that would allow for flexibility in negotiating the lease termination dates. Getty Images signed leases, overcoming complications with some Trinity tenants. Three tenants held up the negotiating process, jeopardizing the transaction. Tridon could not vacate the sixth floor in time, so a deal was struck where Tridon agreed to flip some contiguous space so that Getty could complete its Phase I move-in. Europadisk could not vacate the fourth floor; instead, Getty took approximately 6,000 square feet from Europadisk. Plymouth then had to convince Trinity had to buy out a tenant in another of its buildings, so that Astoria Press could vacate the sixth floor. A domino effect was taking place. If this tenant had refused to vacate Astoria’s future space, then Astoria would have remained on the sixth floor, jeopardizing the entire Getty transaction. To throw one more ball into the juggler’s hands, Getty decided to establish a 35,000 square foot back office/fulfillment center. It needed to be both low-priced and close to One Hudson Square, leaving very few options. Plymouth Partners was instrumental in persuading Trinity to fulfill this requirement at 200 Hudson Street and 12-16 Vestry Streets (a combined building), negotiating for the entire second floor of 36,342 square feet. These two adjoining buildings — part of Trinity’s portfolio - are located directly across the street from One Hudson Square. After seven long months, the leases were signed and Getty Images had a new home. During this time, Plymouth Partners had negotiated with Trinity for three separate leases: the entire fourth and part of the fifth floors at One Hudson Square, the entire sixth floor at One Hudson Square, and the entire second floor at 200 Hudson Street/12-16 Vestry Street. Trinity had negotiated with thirteen groups to create space in One Hudson Square. Plymouth Partners had extricated Getty from the five spaces it had acquired by buying its competition. The Transaction Plymouth Partners structured a deal that allowed Getty a great deal of flexibility with liberal sub-leasing provisions, must-takes and options, since there was still uncertainty over exactly how much space would be required. In the end, Plymouth Partners created the Getty Campus (One Hudson Square and 200 Hudson Street/12-16 Vestry Street) in the most efficient, cost-effective manner despite extremely difficult, "nail-biting" circumstances. The lease term is for 15 years and was at rental rates considered to be very competitive for the market situation. Due to the volatility of this account, Plymouth Partners negotiated very liberal subleasing provisions that allow subleasing of surplus space, with a profit to be shared with Trinity. |
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