Leasing Space in Irvine
- Applicant: Restaurant Owners
- Nationality: Chinese
- Case Type: Leasing Commercial Space in Irvine
- Time: 3 months
- Seeking approval from the Irvine Company
- The client loved the space, was unwilling to move off of it
- Having to design an Irvine Company-friendly deal for our clients
- Writing a personal letter of recommendation
- Convincing the Irvine Company of the value of the client
Finding the prime location for your growing business is a key aspect in being successful. Especially in the food industry, location, infrastructure, foot traffic, and demographics are all things you take into account when looking for a space. So what happens when you find a space you love, a group with the power to lease that space to you agrees to your terms, but then a third party steps in and puts the deal on hold? In Southern California, one of the most prominent owners of properties you may have never heard of is the Irvine Company. If you have ever been looking to lease space in Orange County, you probably have heard of them, because their holdings include over a fifth of the county. And you may have heard how difficult it is to receive their approval.
The Irvine Company is one of the largest real estate developers in the country, and they style themselves as master community planners. Just about anywhere else, if a tenant in a commercial property wished to sublease their property or let the another tenant take control of their contract, and that tenant agreed to the price and terms of the lease, well, that would be the end of the story. It is fairly uncommon, almost unheard of, that the owner of the property would step in and nix the deal, especially with no backup deal in mind. However, the Irvine Company regularly does this. They have a sophisticated team of people working as watchdogs of their properties and they keep an extremely tight grip on who they allow to rent or buy their properties, as is their right as the property owners. This was the situation that our client, a group of restaurant owners, found themselves in.
KEYS TO SUCCESS
We have represented this client many times over the years, and we know them well. When they came to us with this issue, we were already shaking our heads at the level of difficulty we knew the case was likely to provide. They had drawn up a multi-million dollar deal with the company they were due to take over the lease from, they had all the assets ready and available, the seller was happy, but the Irvine Company put a hold on the deal.
“It is sometimes more difficult to get the Irvine Company’s approval to rent a commercial space than to get a green card. On top of having to include everything that the Irvine Company wanted in the rental agreement, we also wrote a personal letter of recommendation for our clients, something that we almost never do. This case was such an exception that I personally did it, I wanted our client to realize their dreams so I tried to take that extra measure in hopes that it would succeed.” – Joseph Tsang, Attorney
The Irvine Company had to be convinced that our client would improve the value of their property before they would sign off on any deal that allowed our client to move into their dream location. We had plenty of ammunition with which to argue, however. Our client was not seeking an extremely long-term lease, instead they opted for a short-term lease of just a couple of years. If the Irvine Company was unhappy with our client, it wouldn’t be long before the agreement would be up. We had to prove that our client had the assets and financial resources to make the deal in the first place, but they needed even more than that. We showed the Irvine Company that not only did our clients have the resources they needed for the deal, they had the resources that even if their business plan completely failed and everything went south that our clients would still have the financial capabilities to stick to the agreement. Further than that, if there was a section or stipulation in the contract that granted one of the parties protection, that protection went to the Irvine Company, not our clients.
This is obviously not ideal. However, in this case, the Irvine Company had all the leverage in the world and our clients were head-over-heels in love with the space. They were more than willing to give up anything contract-wise to get into the space. In a more normal situation, many people in the shoes of our clients would not have agreed to the terms of the contract, but our clients were determined to move forward with that space. The final piece of the puzzle involved a personal letter of recommendation by our firm. We rarely, rarely do such things. We often draft letters for other people to sign, but to put our name on a letter of recommendation is an occurrence that is few and far between. However, given the situation that our clients found themselves in, we felt it was necessary to give them the extra juice required to get approval from the Irvine Company
Armed with the facts and figures and a new contract that was extremely Irvine Company-friendly, not to mention a personal letter of recommendation from our firm, our clients were able to convince the Irvine Company to let them lease their dream property. Their love for the space proved wise, as their restaurant is thriving in their new location.
*Name has been changed to protect client identity
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