Steel Street Case Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Steel Street Case Case Study Solution

Incentivize the leasing agent in a significant way like the $20,000 leasing bonus

Giving incentives to the leasing agents and tenants in a way like a leasing bonus would tend to ensure that the significant reduction in the vacancy rates by having large pool of clients who would sign up for the long term leases. Shortly, it would improvise the current situation of the leasing as a whole.

In contradiction to the benefits, providing the incentivesas an added bonus to the leasing agents and tenants would lead to a reduction in the IRR and an increase in cost.

Lose some of the green elements of the buildings, which might save about$75,000 but possibly make the building more difficult to lease

If Cousins would lose some of the green elements of the building, they would be able to save the considerable amount of money which is required for the project funding. It would also take dedication and efforts. Incorporating the green elementsinto the businessmodel would require careful balancing of three factors including profit,planet and people.

In contrast, losing green elements would not be a good decision for the success of the project as the building would not be appealing to the existing lease renewals and new tenants. Additionally, the new tenants would choose other green properties in the market. The existing tenants would not find it worthy and feasible to renew their leases at $15/ sq. ft. as it would not lead to better environment, enhanced environment quality, energy and water efficiency and better health.

Project is salvageable or not

The analysis of the project with increased amount of required equity and 70% of excess cash flow of investors and 6% preferred return of investors shows that the project is attractive ad profitable from the view point of the investors.From the scenario 01, the total investor cash flows are positive for the projected period of time. In similar way, the cash flows of the investor are positive under the downside scenario. Additionally, the equity investors would most likely make an adequate return even in the downside scenario.

Should the Cousins’ have invested in Steel Street from the beginning?

There are various strategic benefits of the steel street project as the building located in the desirable sites which tends to increase the likelihood of increasing the rents after the completion of the renovation process. The tenants would be willing to pay high rents due to the location of the building i.e. Southsite which is considered a hip neighborhood with umber of startups. Along with this, the Pittsburgh has growth prospects, insulation from RE downturn, high employment opportunities, no overcapacity, as well as diversified economic base. Furthermore, the site is attractive to the employers as they would be willing to place their offices in the near areas. Incontradiction to the benefits, the project is the first office space renovation for the River Triangle Associates as they were only experienced in the renovation of the residential buildings. The analysis shows that the cousins should have invested in the street steel from the beginning.

The assumptions thatthe renovation would be completed within 6 to 9 months of the acquisition is not reasonable as it avoided the high cost of carrying and high interest charges which have to be paid by Cousins. Another assumption that they wanted to reduce the business risk due to which they targeted the middle income markets rather than upper or lower income markets, which is reasonable in the start of the project...............................

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