In the advanced materials manufacturing industry, Materion stands as a global leader, renowned for its innovative contributions across industries. With a robust international presence, Materion's real estate portfolio plays a crucial role in shaping its operational efficiency and financial health.
A few years ago, Allegro pointed out that Materion was significantly overpaying for their headquarters lease.
After many years of overpayment, and with a lease expiration on the horizon, the team was ready to optimize its real estate expenditures and secure a more favorable position in the market.
Assessing Existing Lease and Conducting Needs Analysis
Working with architect partners, Allegro determined Materion’s 80,000 square-foot headquarters was significantly larger than what the operation actually needed. In addition, the rent was severely over market and overpriced by multiple dollars per square foot.
As their headquarters lease neared expiration, Materion was open to looking at other properties in addition to renegotiating their existing lease. Ultimately, the team wanted to make the best financial decision for their stakeholders while also securing incentives for the jobs they create.
Allegro kept these factors in mind as they guided Materion through the acquisition and lease negotiation process.
Setting Local and National Site Parameters
While the building's image and existing location were important to Materion, the team was open to moving headquarters to another location if it resulted in the right cost savings.
Ultimately, Materion wanted their headquarters to be in either Cleveland or Florida. Allegro conducted a labor market analysis, explored salaries in the different areas, and uncovered any market trends that may impact the sites selected.
The team also paid close attention to the available government incentives in both areas.
Narrowing Down Potential Properties
With specific selection criteria and market research in mind, Allegro toured multiple properties in Cleveland and several properties in Florida. The team strategically chose multiple cities and states so that they could leverage different incentives during negotiations.
After reviewing the potential properties in Cleveland and Florida, the team opted to enter negotiations with select Cleveland locations and Materion’s existing landlord. The team eventually narrowed their list down to two finalists: one property on the east side of Cleveland and their existing headquarters.
Renegotiating $500,000 in Annual Savings
Materion ultimately opted to renew their existing headquarters lease agreement—but not without significant improvements. Through strategic negotiations, Allegro secured over $500,000 in annual savings for Materion. Over the course of ten years, this amounts to $5 million in savings. The team also negotiated a significant tenant improvement allowance along with other tenant-specific lease provisions that afford Materion lease flexibility into the future.
Securing $2.25 Million in Government Incentives
On top of negotiating better lease terms for Materion, Allegro also diligently sought the best incentives for the company by leveraging relationships at all levels of government. Throughout the acquisition process, Allegro met with state and local economic development agencies to help them better understand the value of Materion and the jobs the company would bring to the area.
After having several conversations and sending out requests for incentives, Allegro ultimately secured $2.25 million in incentives from the state of Ohio and city of Mayfield Heights.
Overall, the renegotiated headquarters lease in combination with the acquired government incentives positions Materion for significant financial growth and success for years to come.
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