CASE STUDY: 6105 NW 7th Ave – Overcoming Challenges through Strategic Positioning

ASSIGNMENT:

I took on the task of marketing a value-add flex building located on NW 7th Ave. The property, burdened with deferred maintenance issues, was only half rented, presenting a substantial opportunity for repositioning. But both buyer and seller faced obstacles.

CHALLENGES:

Purchased occupied in 2021, the owners found themselves in a tough spot when in 2022 the longtime proprietor of the barbershop passed away and the shop closed its doors after 30+ years. Luckily, they had a fitness group renting the outdoor yard, which showed interest in taking over the vacant space. However, the tenant occupying the while trying to retrofit the space after a three-decade occupancy, ran out of money and vacated the space, leaving it in a stripped-down state with no infrastructure. They did however complete an overhaul of the outdoors with a murals and astroturf, which ultimately made for an excellent selling point for the property. In addition to the internal struggles, the building had an external problem, a major development erected in the early 2000s had effectively blocked on-site parking access.

During the sale, we encountered issues with both lender and insurance underwriting, but due to the condition of the property and wide range of comparable sales because of the changing nature of 7th Ave.

• Vacant
• Grey-Shell Space
• No Parking
• Increasing Mortgage Rates, Taxes, and Insurance costs.

SOLUTIONS:

Our marketing strategy centered on transparently presenting the property’s unique features while acknowledging the challenges that needed to be addressed. Despite the parking and development constraints, the property boasted a secluded outdoor space enclosed by tall walls, offering privacy and security. To mitigate the parking concerns, we highlighted the availability of free street parking behind the building and proximity to a nearby bus station. Emphasizing the property’s potential for an owner-occupier, we targeted businesses seeking a long-term location conducive to customization, attracting value-add buyers with a vision for personalized space rather than immediate returns.

During Due Diligence, we provided data and context to the buyer’s out-of-state lender on the area and the building’s potential. I also met with both contractors and inspectors for the insurance company and lender to facilitate a better understanding of the work that would be needed to bring the vacant side up to code.

• Don’t Hide the Negatives
• Highlight the Unique Positive Aspects
• Local Targeted Marketing
• Work with the buyer’s Lenders and Insurance to understand the Value-Add nature of the purchase.

RESULTS:

Ultimately, the property found its match in a local non-profit organization seeking a long-term establishment. Leveraging public transportation already utilized by their clientele, the organization envisioned using the outdoor space for community outreach events. Their status as a non-profit positioned them to qualify for real estate tax exemptions and SBA financing, although they initially secured funding through a combination of government grants and bridge loans to facilitate necessary renovations and code compliance.

LESSONS LEARNED:

Emphasizing the property’s challenges upfront is integral to streamlining due diligence processes and managing prospect expectations. Proactive engagement with local authorities to verify grandfathered building status for parking requirements proves instrumental in avoiding potential setbacks. Highlighting the property’s unique outdoor space and convenient access to public transit effectively offset concerns about renovations and parking limitations. Good data and support for the valuation and pricing helped make sure the property appraised despite it challenges.