Pre-commitment to a new building

FMG
Client
  • FMG
Space
  • 15,000 Square Metre
Industry
  • Metals & Mining
Locations
  • Perth
Services Provided
  • Location Strategy & Economic Incentives
Cresa Team
  • David Barnes
  • James Carslaw
  • Peter Neunborn

Client Objectives

Fortescue Metals Group (FMG) is a large iron ore, gold, copper and lithium mining company capitalized at A$29 billion with revenue of A$14 billion for 2019. It is headquartered in Perth, Western Australia and has a lease expiry in early 2020. LPC Cresa were engaged in late 2017 to undertake a “stay vs. go” analysis which included conducting a search for new sites within the Perth CBD and surrounds for a new-build pre-commitment as well as assessing existing lease and required Lessee and Lessor works.

Key requirements for new premises included:

  • Approximately 15,000 square meters of office space
  • Primary objective to be cost-effective ensuring maximum shareholder value
  • Location to be outside of the traditional CBD

FMG has an egalitarian workplace and preferred very large floor plates encouraging staff interaction and visual connection across all teams

Results

Following a detailed search for alternative site options and shortlisting, the “stay” option was evaluated against going to an existing building or going to a new building (via pre-commitment).

The pre-commitment to a new building was initially opted for as the first choice. Cresa coordinated ongoing negotiations with the various short-listed proponents while undertaking a more focused negotiation for the preferred “go” option. A detailed Heads of Agreement was agreed as a pre-curser to an Agreement for Lease and a Lease with a high-profile global developer/owner.

With “all of the cards on the table” the “stay” was preferred by the Board and ultimately, a commitment to renew the existing lease was entered into, along with various expansion rights and a re-set of the commercial terms agreed to.

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