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ULTA Salon, Cosmetics & Fragrances, Inc.
1135 Arbor Drive,
Romeoville, IL
291,305 SF Lease Renegotiation/Extension
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BACKGROUND
Ulta Salon, Cosmetics & Fragrances, Inc (“ULTA”), the largest beauty retailer in the country, was exploring alternatives for their Midwest distribution facility in Chicago. Ulta was committed to its lease for 24 months at an above-market lease rate. Additionally, they had approximately 35,000 SF of office space in the DC which made a potential move costly. Due to their fast growing organization, ULTA was unable to commit to a long term lease extension.
APPROACH
Recognizing that the lease rates in Chicago were at a 25-year low and ULTA was paying approximately 40% above current market rents, Jack Rosenberg and Fred Regnery developed a strategy to create negotiating leverage with ULTA’s current landlord, UBS. Using their knowledge of the I-55 market, Jack and Fred developed a short-list of the most competitive landlords in the market and solicited lease proposals from them which downplayed the need for the large percentage of office ULTA was currently utilizing.
RESULTS
Using the competing landlord proposals as leverage, Jack and Fred compelled UBS to reduce ULTA’s rent by 40% for the remaining two years of their lease and extend their lease for five years at the newly reduced rate. We were also able to remove ULTA’s responsibility for the roof maintenance and replacement. Finally, ULTA secured a termination right in the lease should they outgrow the facility during their term.
