InterContinental Hotels Group operates more than 722,000 rooms in 4,900-plus hotels in nearly 100 countries. Its global headquarters is in the UK but its Americas headquarters is in Atlanta. In 2014, IHG set out to either move its Americas headquarters to another building or stay in its current location but have its offices refurbished and its space expanded. It chose to stay in place and lease 488,000-plus square feet on 18 floors. The deal is the largest single office lease transaction in the Atlanta area in 2015, and one of the largest ever in the metro area. It is also the largest transaction of its kind for the client. Arnall Golden Gregory was hired to negotiate the lease.
The transaction took more than a year due to the complexity of the lease, including plans for restacking and redeveloping the space. What the tenant would spend on improvements and structuring a separate “tenant improvements lease,” and the third-party funding for that lease, added a layer of complexity and unique documentation. During the course of negotiations, the office leasing market had tightened in Atlanta, which limited IHG’s options for meeting its space needs outside the current building and made it imperative that a lease with IHG’s current landlord be completed. After IHG chose to take more space in its building, it was necessary to come up with a plan for conducting the renovations. Built into the lease space are three “swing floors,” where over a multiyear period groups of employees will temporarily move while their permanent floor space is renovated. During the months of negotiations, the landlord grew increasingly less motivated to do the deal because the office market was swinging to the landlord’s favor. Ultimately, the landlord set a deadline for closing the deal – May 1, 2015.
The lease was executed on May 1. IHG’s lease commitment is 17 years (with expansion and renewal options). By resolving its space needs well into the future, the client is free to focus on other issues that will strengthen and grow the business. AGG is now representing IHG in connection with the closing and bond financing for certain equipment to be installed in its renovated premises, and also in connection with the negotiation of IHG’s construction contract for the renovation work.