The lease vs. own decision

By Derrick Van Mell

Total Administrative Services Corp. (TASC) has been providing third-party employee benefits administration since the 1970s. Founded by Chairman Don Rashke, it has always focused on farms and small businesses; today it has clients in all 50 states and its buildings are one clear reason for its success.

In its Madison headquarters, TASC occupies two buildings near the Dane County Regional Airport. The first is 21,000 square feet and built in 1996, and the second is 23,000 square feet and opened in 2006. Designed by Flad & Associates and built by Vogel Brothers, the buildings have been, according to CEO Dan Rashke, "absolutely critical to our steady growth over the past 10 years".

TASC carefully considered all the factors in the decision to lease versus own. The decision to own weighted these factors:

-- Making a statement of permanence and commitment

-- Controlling the development of IT and security infrastructure

-- Develop real assets for a service business dealing with intangibles

-- Control use of space of other occupants

-- Provide high quality property maintenance

-- Providing attractive amenities for staff

-- Being able to carry and control land for long-term expansion

Many businesses find ownership has the advantage of being able to control the design details. An example for TASC was being able to color-coordinate the site signage with the interior décor, reinforcing their logo and brand message. A display case and corporate timeline are prominently displayed in the main lobby, a right a tenant would have had to negotiate for. And ownership also makes a statement of community commitment; TASC purchased three of Madison’s famous colored cows, which today graze within the buildings. Success is in the details.

As TASC grows, their largest clients expect more and more of their service providers. The client tour, therefore, becomes more important and having an impressive (but not ostentatious) facility is a powerful selling tool.

Ownership is sometimes thought to be less flexible than leasing, but TASC has disproved that myth by taking decisive steps to ensure maximum financial and spatial flexibility. The menu of facility flexibility initiatives included:

-- Creating spaces that are easily subdivided

-- Designing the site for expansion in several directions

-- Using space standards that let TASC take advantage of telecommuting

One effective expansion opportunity is to build a "cafetorium" connector between the two buildings, which will add space without being disruptive.

TASC has benefited from its far-sighted flexibility investments. It has ebbed and flowed into spaces, filling empty spaces with rent-paying tenants, with leases timed to fit expansion plans.

TASC has also foreseen how space use can be reduced by careful investments in technology. They now have remote offices in six other states (plus a call center in Green Bay), the result of a business acquisition plan. Telecommuting technology and flexibility in space use have let them retain and quickly assimilate this new staff. TASC’s steady and profitable growth is proof of the role thoughtful building decisions can play: they’ve grown seven-fold in 10 years. The buildings TASC owns let them grow steadily for decades to come.

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