SEPTEMBER 2016 \ BUILDING DIALOGUE \
19
End Users
is needed and capitalize on the
plug-and-play mentality of
what exists. How did you craft
the sublease from a brokerage
perspective to best spend the dol-
lars available as tenant improve-
ment monies?
SM:
From a previous project and a
past CRE life, I had prior knowledge
and perspective of this space and its
profile. I knew the economics, so we
were able to secure a rate that was 25
percent under market and, by avoid-
ing a full build-out, we mitigated the
capital costs by reusing furnishings
and finishes.
RS:
We focused on recalibrating low-
cost but very visible aspects of the design
to create maximum impact, while being
responsible to spend.
SM:
All from red to the Sunrun blue!
QUESTION: What have you found are some of
the biggest advantages and disadvantages
of working with a turnkey sublease?
SM:
The greatest success for us has been, pure and sim-
ple, the economics of the turnkey sublease and the speed
to market. We were also strategic about making sure our
growth plans really dovetailed with the previous tenant
and the building. Strategic growth strategy within the
Sunrun real estate portfolio and the 1515 Arapahoe towers
was pivotal.
Of course, we learned a couple lessons. The density and
agility of the finished space isn’t perfect. For example,
Sunrun employees have “self-adjusted” the workspace by
removing some of the workstation panels themselves to
better accommodate collaboration. We also had to install
sound masking since it’s such an open space, but that has
been really effective.
MW:
Instead of densified, I’d describe the space as “opti-
mized.” Would you agree?
SM:
Yes, we definitely optimized the use of space versus
just densifying it. We did not include any private offices,
which other locations are prescribed for “director” level
and above. Instead, we gave that space to all the employees
as shared amenity-rich space. Also, we optimized our use
of the building’s amenities, like the first-floor meetings
rooms and exterior space.
MW:
You didn’t have to re-craft the space technolo-
gy-wise and all infrastructure was in place. How strongly
did that factor into your site selection strategy?
SM:
We literally maintained all the technology; it was
“plug and play” and was very impactful in our space se-
lection criteria.
RS:
It was a big advantage since employees were able to
move in post-haste and go live on Day One.
QUESTION: What are some specific characteristics of this
project as a sublease versus a traditional TI project?
RS:
One aspect was that the office and conference room
spaces were already prescribed, so we had to balance what
was already here with the Sunrun’s program and needs. It
helped to have such an educated client!
SM:
We had limited choices, so we had to be purposeful
in our criteria for success and resultant decisions to sup-
port that goal.
In addition, the speed to market was unique and defi-
nitely an advantage. It completely facilitated our ability to
ramp up and become operational.
MW:
Which really mitigated the impact of the project on
your corporate bottom line. You already have 315 people
producing revenue!
SM:
Another advantage is that it’s a three-year term with
an option to renew. So it’s only three years on the balance
sheet, which is great for our financial health. A sublease
gives us great flexibility, not just in terms of scaling or size,
but also with the terms. Since we were first in the door on
this space, we were given a lot of consideration – for ex-
ample, we have first right of refusal on future space that
comes available.
MW:
There is a lot of psychology involved, as well as strat-
egy.
SM:
Definitely.
QUESTION: How is the design and construction industry
responding to subleases, given the high turnover of space
in the market and the “new normal” of settling into a
former company’s space?
CM:
Refreshes like this one are becoming more common.
As various market segments continue to experience fluc-
tuation, I think we’ll see more turnkey subleases. They can
make a lot of sense.
RS:
Yes, and adaptability and being inventive become
key advantages.
SM:
We had a lot of advantages, with the existing util-
ities, the technology, the existing furniture, etc., but you
also have to be very creative and nimble. Which, thank-
fully, are two of our corporate values, as is being “custom-
er-obsessed.” Together, as a project team, we accomplished
that value for our end users!
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Sunrun blue shines through sublease space.
