Survey of Management Fees Reveals SavingsFinancial services company saves $75,000 per annum |
Our client was a financial services company leasing a sizeable portion of a building on the edge of the central business district in Chicago. Their lease required management fees to be customary with the local market for similar class buildings. Upon comparison to industry benchmarks, it was clear this wasn’t the case. However, during initial negotiations the landlord discounted the accuracy of the benchmarking data, and further refuted the issue offering only cursory evidence to support its position. Deloitte Financial Advisory Services LLP (Deloitte FAS) was not satisfied with this rhetoric and chose on its own to conduct a local market survey using its extensive client network within the industry. Upon delivery of this survey to the landlord, the landlord agreed to resolve the issue by providing the tenant rent credits equal to $75,000 per year over the three year audit * period, in addition to reducing the management fees on a go forward basis.
Total savings: $225,000 in rent credits.
Overlying lessons:
Industry benchmarks are an excellent way to identify potential issues; however, sometimes it takes additional resources and persistence to win the day. Deloitte FAS is a leader in the industry and also has extensive resources specific to almost every other industry available at our fingertips.
*The term "audit" as used herein is not and should not in any way be construed to be synonymous with the terms "audit," "audit procedures," "compilation," "review" or any form of "attestation" service as described in the pronouncements on professional standards issued by the American Institute of Certified Public Accountants.
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