Client

Nestle South Africa – Distribution Centre.

Brief

To significantly reduce occupancy costs at Nestle’s distribution centre located in Johannesburg. Size of transaction 38 000m².

Services Provided

Tenant Representation.

Solution

5th Avenue Properties working exclusively on behalf of Nestle, were appointed to undertake a “stay vs. go” analysis for the DC located at Longmeadow. 5th Avenue Properties engaged with four major industrial developers, preparing a brief and calling for proposals to accommodate a new DC. Negotiations were opened with the existing landlord to renew the lease agreement for a period of 12 years .

Creating a competitive environment in order to drive down costs. Proposals and offers were analysed from both a quantitative and qualitative perspective. After a number of rounds of negotiations it was determined that the optimal real estate solution for Nestle was to renew the lease agreement with the existing landlord.

Results

Rental savings in excess of 38% were achieved. The lease was restructured changing the agreement from a triple net to a double net lease agreement. Effectively passing the structural risk pertaining to the building back to the landlord.