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PEC Solutions

Negotiating Through Complications

Just three years after CEO David Karlgaard started PEC Solutions, Inc., he found himself president of the Washington Fast 50, the 50 fastest-growing companies in the region. Like other high-tech executives, David discovered that with fast and innovative growth comes challenges—challenges that demand innovative solutions. PEC Solutions executives presented some of those challenges to Jim Wright when they came to him for a build-to-suit transaction in 1997.

The challenge: a five-year delay
PEC Solutions expected its exponential growth to continue for at least five more years. David needed a 100,000 square-foot building immediately, and an additional 70,000 square feet by late 2002, when its current lease expired. The challenge? Secure a site and financial terms in 1997, but not commit to starting construction until late 2001.

“I knew we were asking the developer for something a bit out of the ordinary,” Wright says. He identified a building for lease with a neighboring property for purchase. First-class negotiating allowed Wright to convince the developer to

  • remove the undeveloped site from the open market for five years
  • grant PEC Solutions the exclusive right to construct a building on the site for delivery in 2002
  • control the eventual cost of the site

In 1998, PEC moved into Fair Lakes V in Fairfax, Virginia and secured the adjacent land parcel at a reduced price for future construction. The property is at a prime location – visible from the Fairfax County Parkway, just off the I-66 corridor.

Negotiating for the best terms — even with complications
In 2000, PEC Solutions was ready to move forward, but the company faced three substantial complications:

  • PEC needed considerably more space than it originally planned — 150,000 square feet, rather than 89,000 square feet.
  • PEC needed to vacate its original space by December 1, 2002, thrusting the company and the developer into a tight time frame.
  • PEC needed affordable financing in the midst of a sagging economy and rising interest rates.

Wright worked out the highly complex mortgage loan to ensure that PEC would secure the most advantageous financing possible. Then, because of his experience in the Doubler’s Club, he was able to keep a close eye on the markets and successfully advised PEC on the best time to lock in the deal. The developer agreed to assume penalties if the new building was not ready for occupancy on time.

The lease was closed in May 2001 and the building was completed on schedule.

Skillful and honest negotiations mean success
Throughout the negotiations, Wright's ability to maintain a solid relationship with all parties was a key factor in the deal’s successful outcome. “Being honest doesn't mean being soft,” Wright says. “If you have market intelligence and build and maintain a competitive atmosphere, then you eventually get to a win-win transaction.”

“Jim combines his expert knowledge of the real estate industry, his enthusiasm and energy, and his understanding of our corporate personality that he has gained in our 14-year relationship, producing an indispensable resource for a rapidly growing company,” David says. "We consider him to be one of the essential contributors to our company's success."

PEC Solutions
Fairfax, VA

For the Lord gives wisdom, and from his mouth come knowledge and understanding. (Proverbs 2:6)

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