Project
In February 2010, J Street completed negotiations on a long term 18,000 square foot lease at 1255 23rd Street, N.W., for long standing client Reading is Fundamental (RIF). In early 2011, RIF approached J Street to strategize about potential real estate downsizing solutions enabling RIF to continue its critical mission despite federal funding cut backs. RIF is the oldest and largest children’s and family nonprofit literacy organization in the United States. They prepare and motivate children to read by delivering free books and literacy resources to those children and families that need them most across the United States.
Challenges
The current economic and political environment triggered a dramatic decrease in RIF’s federal funding which in turn caused a significant reduction in staffing. As a result, RIF’s lease became a significant financial liability for the organization. RIF still received significant private funding so “right-sizing” the requirement for RIF’s new paradigm was a must. The challenge was to find a subtenant to take most if not all of RIF’s space when the real estate market was in the middle of the worst recession in 60 years. RIF needed to reduce its operating footprint by almost 50 percent.
Solutions
The J Street approach was multi-faceted: identify a broad range of subtenants for all of RIF’s space and find RIF a new smaller, more efficient and more affordable home or find a subtenant which would work with RIF to share the existing space to meet both their organizations’ needs.
Results
J Street’s brokerage team was able to identify the perfect subtenant for RIF’s space. The solution involved a complex set of negotiations resulting in RIF subleasing all 18,000 square feet of its space at 1255 23rd Street to Plan International USA, Inc. for the remaining eight years of the prime lease term. Simultaneously, the J Street team, working with Plan USA’s brokers, were able to negotiate a reverse sublease with Plan USA whereby RIF sublet 10,000 square feet on the 11th floor of 1730 Rhode Island Avenue for Plan USA’s remaining term of five years effectively swapping spaces. This series of transactions was a true win-win for all involved. RIF lowered its real estate liability exposure while Plan USA was able to meet its growing real estate needs .