Customizing the Lease Experience... Let's say you're Equity Office Properties (EOP) with
a portfolio of 760 buildings totaling 125 million square feet in major markets nationwide. How can you leverage this scale to benefit your tenants? That's exactly the challenge facing Mark Scully, Senior VP - Customer Solutions at EOP. And how can you maximize the value of your REIT capital structure? Remember, you're largely free to manage each building without constraints of partners or property-specific lenders.

Scully and his team began by selecting 75 "strategic" EOP customers. Each leases at least 100,000 sq. ft. in three separate EOP buildings and otherwise occupies at least one million sq. ft. These customers, which account for 22% of EOP's total portfolio, include Ernst & Young, Metropolitan Life, PriceWaterhouseCoopers, Travelers and Washington Mutual (WAMU). So for example, each week EOP conducts a conference call with WAMU to coordinate all aspects of WAMU's 56 EOP leases totaling 1.6 million sq. ft.

To speed up transactions, EOP has developed a Customized National Lease for WAMU and 22 other customers (with 21 more in process). According to Scully, the Customized National Lease covers 80% of the issues in a normal lease and saves each party $15,000 per transaction. Savvy service providers welcome the opportunity to work more strategically with their clients across EOP's portfolio. Future plans include implementation of an Onyx-based CRM (Customer Relationship Management) program that will centralize all tenant information (service calls, billing records, survey performance, special needs, etc.) into a powerful database.

EOP's size and single-ownership enable it to accommodate companies expanding and contracting in different markets. For example, EOP might terminate a lease in one market and sign an equivalent lease in another market. Likewise, tenant improvement allowances can be spread across a customer's full EOP portfolio. Very few other owners can provide similar service.

--Peter Pike