In some cases, clients call upon a seller representative because their business is booming and they need to expand operations. In other cases, clients find themselves in a bind due to the negative changes in the economy and require our expertise to mitigate the downside exposure and investment risk.
The Situation
The latter was the case for the client, who owned and intended to occupy an office property. The downtown Denver, 8-story, multi-tenant office building was purchased with the intention of occupying 50 percent of the usable space, however as negative economic conditions persisted, this goal proved impossible. The impact on the client's portfolio necessitated the disposition of the 110,000 square-foot property. The client engaged Lowrey Burnett, a Certified Commercial Investment Member (CCIM), to quickly identify a buyer for the property at $4.8 million.
The Challenges
Despite the headwinds presented by the economic conditions, there were additional hurdles that needed to be addressed in order to sell this property in a timely manner. This particular property was situated on a ground lease with approximately 40 years remaining. In addition, there was an upcoming increase on the ground rent payment and the land the property was situated upon was owned by 3 different parties.
To further complicate the situation, the property had significant deferred maintenance and functional obsolescence that required any future buyer to invest over $10 million, in addition to the purchase price, in capital expenditures to upgrade the HVAC, plumbing, elevators, electrical, structure, and more.
The property's negative attributes didn't stop there, unfortunately. Sitting right in the heart of downtown Denver, there was zero parking associated with the property. Last, but not least, the multi-tenant office building was only 15 percent leased at the time of disposition.
Despite all the challenges, Burnett was not deterred. With the right vision from the right buyer, this downtown Denver office building could become a profitable investment.
The Result
Burnett, a leading seller's representative, marketed the commercial property to local, regional, and national investor pools. An experienced Chicago-based buyer who was comfortable with overcoming massive deferred-maintenance challenges in commercial investments was identified, ready, and willing to face each challenge head on. Burnett was proud to help his client achieve a great result considering the then-current conditions, bringing in a full-price offer for a seller experiencing difficult times.
The Stats
Burnett acted as the seller representative for a client who urgently required the disposition of their Denver, Colorado multi-tenant office building. A full-price offer was procured and the transaction closed on schedule.
Whether the economy is working in your favor or against your long-term investment strategy, contact our CCIM-designated broker at Fountainhead Commercial today to create an actionable plan to maximize the performance of your commercial properties.
