Friday, December 11, 2015

Is your #CRE Solution Contained in the Problem?

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I had a good week! As weeks in my business go, this week ranks near the top. I closed a large deal, got a contingency released from a signed lease which allowed the owner to pay us, and entered contract on a building I have marketed since March - Bravo!

As you can appreciate, the reality of the week is still fresh but I had a chance to reflect upon some of the events that culminated in this week's happy dance.

All of the aforementioned deals contained a MAJOR problem, objection, or roadblock that prevented the completion. In short, there were issues! I believed that the ways in which the challenges were overcome was post worthy, so here goes. Spoiler Alert - ALL of the problems contained the solution.

Contingent Lease: We built a contingency into a lease deal because we were told, by the city, that a parking variance was needed for our use of the building. My guy signed the lease with the comfort of knowing if he couldn't get the parking issue resolved, he could walk away. I had never heard of a parking variance for a standard industrial use in an appropriately zoned industrial building - but that is a topic for another day. Initially, the city told us we needed 112 parking spaces. The building had 55. We only had 38 employees. Hmmm. The problem was that we overstated the amount of the building that would be used for manufacturing. The solution was to conform our layout to properly represent the manufacturing space, voila - parking issue solved, contingency removed.

Building too big: A client needed to expand his operation. I sourced, what I believed was the PERFECT building. I confirmed the availability, pricing, and touring instructions. My fingers quivered as I dialed my client's number. My submittal was greeted with "the building is too big for my use". Once again, the solution was contained in the problem. You see, a portion of the property was leased short term. If we could convert the short term lease to a long term lease and my client could occupy the balance of the building, then the issue of the building being too large would evaporate. Low and behold, the short term guy was thrilled to extend his lease, the property became "smaller" and my client is the proud new owner.

Price too low: I have been marketing a building, that is a bit of a misfit toy, since March. The owner is delightful, however and I really wanted to get the building sold for him. We have had three false starts - which are painful. Another group has been orbiting since August, but could not reach our pricing expectations. My guy was facing a costly move to a smaller building once I sold his building. The problems were the price that the buyer was willing to pay and the expense of moving my guy's operation. We solved the problems buy constructing a sale to the buyer, at his price, in return for an advantageous lease of a portion of the building for my guy.

If you have a problem, don't despair. The solution is contained in the problem if you look hard enough.

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