Savoy Building

Jim Tsagalis was retained to undertake the project leasing and management of this large CBD land holding in mid 1996. Upon examination of the redevelopment options, he advised the Landlords to reconfigure tenancies on both the Hay Street and Murray Street Malls, to effect greater rentals, in keeping with marketing conditions, and improve the covenants of tenants.

The beginning of the process included a former tenant, The Look, whom he had arranged to have their business purchased by Tie Rack. Jim facilitated the purchase of The Look business by Tie Rack purchasing the lease, and conditional upon a reconfiguration of the tenancy by moving it into a part of the existing Betts & Betts tenancy. Upon achieving this, a small void area was created whereby this could be used in the redistribution of what was then the Rockmans tenancy.

Rockmans had been leasing premises which had enjoyed a frontage of over 17 linear metres. This was reconfigured into the void area and subdivided into two tenancies. At the conclusion of this reconfiguration of tenancies, the increase of rental on the Hay Street component was some 24%.

At the same time a strategy of “moth balling” dormant and unused space was implemented which reduced the statutory outgoings exposure to the Landlord significantly. This strategy was extended onto the Murray Street perspective of the buildings whereby a limited tender was negotiated for what was then the Timezone tenancy, between Timezone and another prominent operator whereby Lease Equity increased the rental by an amount of approximately 16%. Lease Equity then renegotiated the lease for The Merchant Tea Company gaining an increase of rental of some 14%.

The strategy then turned to negotiating with Aherns whom had leased premises on Murray Street. This then turned into a negotiation for Aherns to expand into the core of the building which had been dormant for some 20 years.

This ultimately resulted in the sale of the building to NAB for the David Jones redevelopment, fundamental to the purchase was the ability of Aherns to extend into the dormant space. By a conservative calculation the increase in value to the building resulted in a sale price versus valuation prior to the asset management/leasing of over $7 million.