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Renew the tenant or re-let the floors? An office lease decision

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Mainbrook Offices (a fictional owner in Frankfurt) has a tenant on 10,000 square metres whose lease ends this year. Option A: renew for 5 years at EUR 400 per square metre a year, with 6 months rent free. Option B: let the tenant go, refurbish for EUR 2 million, and re-let after 12 months empty at EUR 450, with 9 months rent free on a 4-year lease. While empty, the owner pays EUR 50 per square metre in service charges and taxes. Over the same 5 years, which option brings in more?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Net income over five years = rent paid minus rent-free months, empty costs and refurbishment
- Option A: rent for 5 years minus 6 months free
- Option B: 12 months empty, then 4 years of rent minus 9 months free, minus refurbishment and empty costs
- Net effective rent: net income per square metre per year
- Risks: how long the space really stays empty, and the signal a lower rent sends

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Option A income
What a strong candidate does: 10,000 square metres x EUR 400 x 5 years, minus 6 months free.
Option A net rent over 5 years (EUR million): (10,000 × 400 × 5 - 10,000 × 400 × 0.5) ÷ 1,000,000 = 18
Step 2: Option B rent
What a strong candidate does: 10,000 square metres x EUR 450 x 4 years, minus 9 months free.
Option B rent after rent-free months (EUR million): (10,000 × 450 × 4 - 10,000 × 450 × 0.75) ÷ 1,000,000 = 14.63
Step 3: Option B net income
What a strong candidate does: Take off EUR 2 million of refurbishment and EUR 0.5 million of costs while empty.
Option B net income over 5 years (EUR million): 14.625 - 2 - 10,000 × 50 ÷ 1,000,000 = 12.13
Step 4: Net effective rent, Option A
What a strong candidate does: EUR 18 million over 10,000 square metres and 5 years.
Net effective rent A (EUR per square metre a year): 18,000,000 ÷ (10,000 × 5) = 360
Step 5: Net effective rent, Option B
What a strong candidate does: EUR 12.125 million over the same space and years.
Net effective rent B (EUR per square metre a year): 12,125,000 ÷ (10,000 × 5) = 243

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Mainbrook should renew the tenant, because Option A earns EUR 18 million over five years, or EUR 360 per square metre a year, against EUR 12.125 million, or EUR 242.50, from re-letting at a higher headline rent. First, a year of empty space costs both the lost rent and EUR 0.5 million of charges the owner must pay itself. Second, the higher EUR 450 headline is eaten by 9 months rent free and the EUR 2 million refurbishment. The risk is that renewing at EUR 400 sets a lower rent level that buyers and valuers will see, and that the tenant may still leave in five years. As a next step, offer the renewal with a rent review in year three, and check how long similar floors in Frankfurt have stayed empty.

Risks a strong answer names: Valuers often quote the headline rent rather than the net effective rent; A shrinking tenant may want less space at the next renewal.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.

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Swap roles and run the next case, so you both practise answering and scoring.

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