Challenge |
Reverse declining image and occupancy levels causing a deteriorating property value at existing Class A office project. |
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Property Situation |
- Two 12 year old, well located, deteriorating, Class A office buildings
- Negative momentum to tenant quality causing value deterioration
- Developer/Owner managed facility
- Under capitalized—lacking funds for tenant improvements and capital upgrades
- Short term lease strategy causing decline in rental rates
- Broker [mis-] perception: Commission payment uncertainty
- Loss of on-site amenities and weakening market position
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Market Condition |
- Market-wide direct vacancy at 15%; Submarket at 20% and climbing
- No financing available, no private capital available
- Lack of absorption overall, negative absorption in submarket
- Newer developments and locations cannibalizing subject market’s tenant base
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Strategy |
Reverse negative value trajectory through re-capitalizing and re-imaging the asset. Change the thinking on-site and the perception off-site. |
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Actions |
Maier Siebel Baber emphasizes Ownership’s goals through actions of its Principals. Maier Siebel Baber initiated a major effort to partner with the Brokerage community to re-message property goals away from “Siege” mentality emphasizing capital preservation” to “long term hold - value proposition;” altered lease proposal emphasis to confirm new thinking - total rent vs. total investment; changed brokerage goals to Target higher quality, bellwether tenants; re-imaged asset through lower cost, yet higher visible site improvements while maintaining diligent internal cost controls; subsidized amenity package to attract services necessary to capture quality; retained new on-site teams and empowered them to provide high touch, solution driven, “tenant first” approach at all times; reduced turn around time for inquiries and proposals; maximized in-place assets such as underutilized signage and surplus parking during high vacancy period; conducted principal to principal, one-on-one, and small focus group meetings with market leading brokers and tenants, displaying a genuine value for their perspective; created and implemented a strategic re-investment budget seeking to maximize cost/benefit analysis of planned upgrades with strong reliance on re-use vs. replacement; and studied competitive set’s advantages which generated winning goals and objectives for entire project team. |
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Result |
Maier Siebel Baber dramatically improved the overall position of the asset in the market and value increased from the purchase price of $134/SF to the sale value of $196/SF in 54 months. |
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Current Status |
Sold |