Overview

NC Rate Bureau, Reinsurance Facility and Insurance Guaranty Association (NCRB, NCRF, NCIGA) engaged the services of Rich Commercial Realty three years before their lease was to expire. They knew the building they occupied for 20+ years was not suitable for their current needs. Over that period they had grown into the entire 31,000 sq. ft., two-story facility and there was no room to grow further or create better efficiencies.

They engaged Rich Commercial Realty to assist them with an overview of the market, initially thinking that another lease in a Class B building given the abundant supply of space, would be the best scenario. Several buildings were presented, though many came with their own issues, some of which were created by the financial crisis in 2009-10. Thus it was deemed that a build to suit for lease could provide a new building customized to their specifications in a location that would be optimal for the next twenty years.

Results

After a thorough review of several existing proposals, a possible build to suit option came to the table to address their specific operational requirements. The market for speculative development virtually dried up creating a unique opportunity for a build to suit for lease for the NCRB, NCRF, NCIGA since they would occupy the entire new facility. The lowered risk for the lender and developer and the competitive land cost for various proposed sites provided a competitive rental rate below market. NCRB, NCRF, NCIGA executed a $4+ million triple net lease for a ten year term which will enable the agency to have more control over their operating expenses. Three governing boards voted to approve the new lease terms which allows them substantially greater efficiency and significantly reduces operating costs.

Value Added

Rich Commercial Realty had previous success with another NC agency and the same developer who understood the need for a quality product that would address the functionality of the organization for the short and long term. Cost was a key component and RCR’s market knowledge of similar property types gave the management team a clearer understanding of the possible options for build to suit for lease. This was a key driver in taking what might have been thought a more expensive option. The tenant enjoyed a cost savings by planning a building that worked for the short and long term, leasing it 100% and enabling the developer to seek funding from sources through a very competitive financing market given the long term credit tenancy NCRB, NCRF, NCIGA afforded.

“Having Rich Commercial Realty on our team to evaluate possible real estate options gave our three boards assurance that we made the very best decision for our Organizations.”

-- Ray Evans, General Manager, NC Rate Bureau

Overview

SpecComm International, Inc., a 30-year-old publishing company of business magazines was feeling the pinch of the tough economy and business environment. Nearing the end of a five year lease for office space, they felt the need to compare renewal  versus relocation costs. Their landlord had been understanding and had worked with them during the recession. With their landlord’s cooperation, SpecComm had down-sized their office space and returned space to their landlord to cut expenses; the landlord had even let them reduce their rent towards the end of the lease to help them through. But SpecComm management knew they had to cut expenses even more to improve profits over the next seven years and decided they needed to compare the proposed new lease from their landlord with the costs of other available properties.

Results

Rich Commercial Realty identified a number of interesting properties in their target area and reviewed them carefully with SpecComm management. There were two desirable properties available within one office park that gave SpecComm the economic leverage that it required for the next six years. Several rounds of competitive offers created a truly cost effective solution that more than met their expectations at a cost their current landlord felt he could not match. The new, larger space was designed and built to their specifications at the new landlord’s sole cost and expense. The new facilities provided more space, a more productive and enjoyable work environment while providing much needed economic relief.

Value Added

Rich Commercial Realty/KW Commercial negotiated rent concessions that were 23% lower than the renewal space. In lieu of free rent, they negotiated a rent schedule that gave SpecComm better cash flow.

“This is the third time we have utilized the services of Rich Commercial Realty for our office leases. They are a valued strategic partner and we welcome the opportunity to recommend them to others.”

–Dayton Matlick, President, SpecComm International, Inc.

With 12 months remaining on her lease, Dr. Mary Walton engaged the assistance of KW Commercial/Rich Commercial Realty on the advice of her attorney.

The Challenge
With escalations over a nine year lease, the monthly rent that the practice was paying had become burdensome. Several questions about space utilization also created an opportunity for review.

The Solution

After deliberations with the architect and KW Commercial/Rich Commercial Realty, it was determined that the space could work and by extending the lease term, the practice could improve its cash flow over the next six years. Additionally, a personal guaranty was reduced substantially which created an improved financial position for Dr. Walton.

The Result

The new term was dramatically improved by blending and extending the lease, utilizing concessions, a lower rental rate and minimal tenant improvements. Dr. Walton’s practice yielded immediate savings with the new rate taking effect one year early.

“KW Commercial/Rich Commercial Realty did a stellar job for my practice,” said Dr. Mary Walton, owner of Walton Orthodontics. “I would welcome the opportunity to share how positive this experience was with minimal time involved on my part.”

Elaine Buxton, CEO of Confero, Inc. had a lease expiring within nine months of her engagement of Rich Commercial Realty. Having built equity in her company, she felt a purchase was a good investment given the great terms banks were offering owner occupants. Her ideal scenario was to purchase a property she could occupy by the end of her lease term to avoid two concurrent monthly payments.

The Situation

After being pre-qualified for an SBA loan, Ms. Buxton had a good feel for the price range she could afford. RCR completed a market survey of eight properties in that price range which were reduced to three strong possible offerings. Timing was key to making an offer, negotiating the terms and performing due diligence. After closing, modifications to up-fit the property within a 30 day window had to be achieved to avoid a rent and a mortgage payment in the same month. A family illness during the process created some timing challenges, but we were able to achieve the desired result.

The Solution

We started early, developed an ideal time line and focused on the end goal to get the job done. Prior to closing, we secured an inspection report of the property and an appraisal as part of the due diligence. Ultimately, Ms. Buxton walked away from the negotiation of the first choice and began negotiating with a second property. That tactic caused the Seller to agree to the Buyer’s terms.

The Result

We were able to close on the property within the desired timeframe, at a substantially discounted price.

“Rich Commercial Realty was great throughout the entire process. They listened to our needs, uncovered great options and resolved challenges along the way,” stated Elaine Buxton, CEO of Confero, Inc. “They knew when to help and when to give me time to process information. I gladly endorse them to others who are considering a commercial real estate purchase.”

To take advantage of the soft tenant market while ensuring favorable renewal terms for Scott Insurance.

The Means

Since the tenant had been in the space for six years, they chose to stay at their current location and wanted new tenant improvements. The tenant improvements presented a challenge to the clients since they would be in the space while construction  took place and their work would be interrupted. Rich Commercial Realty leveraged buildings within a 1-mile radius against the renewal proposal to ensure that Scott Insurance was getting the best renewal terms possible.

The Solution

RCR negotiated market concessions for a 66 month renewal term, tenant improvements to upgrade the space and after-hours construction to minimize the clients work interruption.

The Result

Within 30 days from engaging our services, Scott Insurance renewed its lease for 66 months and received market concessions in the form of free rent and tenant improvements. Minimal client time was invested in this transaction allowing them to remain focused on their business throughout the deal.

“Working with Rich Commercial Realty is always a seamless process,” said Craig Ryder, Chief Financial Officer for Scott Insurance. “They enabled us to focus on our business while they facilitated a speedy renewal on our terms.”

The Means
Rich Commercial Realty met with TBJ’s Landlord to address issues of concern such as common area restroom upgrades, security, signage and space utilization. Proposals were then solicited from select properties to gain perspective on available market concessions offered to entice such a great credit tenant to its property. During this process, it became clear that the Landlord was not willing to address the modifications in a timely manner and that a relocation would be the more likely choice. The proposals were reviewed again, but none offered a property that was in the right location with the correct configuration.

The Solution
One building had been removed from the initial list due to price, was revisited after several months of negotiation on other potential properties. The market had become softer with more vacancy and less absorption making it a great time to go back to that Landlord and see if they were willing to negotiate both price and terms to gain TBJ as a tenant. It was a true win-win situation for both parties.

The Result
Triangle Business Journal leased space in a Class A office building for a 7 year term, gained market concessions and achieved a newly designed space without the hassle of retro-fitting the space while trying to do business. They also got signage on a prominent corridor in a more centrally located location.

“RCR understood our business model, helped us achieve our goals and made the process a pleasurable experience,” commented Charlene Grunwaldt, Editor of the Triangle Business Journal.

The Situation
The firm initially thought they might want to purchase, but after reviewing a possible historic property option, they decided it was not a good use of their time and money and the best solution would be to either renew or relocate if it made economic sense to do so. While the vacancy in their submarket was as high as other submarkets they would consider, the other markets did help to create leverage. The firm was also made aware of the inefficiency of their space which could be used to their advantage. In the event they relocated, more efficient space could net additional monthly savings in rent.

The Solution
Rich Commercial Realty located several competing properties that were used to leverage the negotiation to the satisfaction of the tenant. After a minimal amount of time was devoted to touring properties and reviewing competing proposals, the landlord’s proposal was further negotiated to obtain additional rent concessions to entice the firm to execute a new seven year term. A lease amendment was executed within 60 days of engaging Rich Commercial Realty.

“This was the 3rd time Rich Commercial Realty has helped us secure favorable market terms for our office space,” stated Frank Gordon, Partner at Millberg Gordon Stewart, PLLC.  “ Their market knowledge and expertise saved us time and money.  We are pleased to recommend them to others who might require their services.”

The Situation
Greenhorne & O’Mara engaged the services of RCR for the fifth time in 20 years to secure proposals from their existing landlord as well as other competing properties in order to leverage the market concessions available.

The Solution
The declining demand for space provided extremely competitive proposals. While no contiguous space was available, the economics from their current landlord caused Greenhorne & O’Mara to execute a new five year term.

The Result
A savings of 35% over the initial proposal was realized just in rent in addition to tenant improvements and signage.

“We’ve used Rich Commercial Realty’s services five times over the past 20 years,” stated Joe Skinner, Regional Vice President for Greenhorne & O’Mara, Inc. “While we get calls from time to time from other brokers, RCR’s tenacity made them a long term strategic partner for our success and growth.”

The Situation
Advanced Plastiform, Inc. (API) specializes in custom plastic thermoforming for a range of industries and needed new warehouse space to handle expanded manufacturing operations. They approached Rich Commercial Realty/KW Commercial with the challenge to locate a facility of at least 50,000 square feet. API was open to new construction or an existing building; however the new site would need to offer enough space to expand in the future.

The Solution
Rich Commercial Realty simultaneously began a comprehensive market survey of existing warehouse space in the area between Eastern Wake County and into Franklin County while searching for unimproved land that would accommodate new construction in the same area. Agent Tripp Lineberry reached out to his contacts to receive bids for new construction to have ready should API select an undeveloped site. After locating an existing facility in Zebulon that was listed close to the goal price, Lineberry moved quickly to ensure due diligence was completed prior to a formal contract to keep the deal moving forward according to the client’s aggressive timeline. Lineberry kept in close communication with both buyer and seller’s agent throughout the process to ensure required improvements were completed on time so that API could receive accelerated depreciation, which was the key to finalizing the deal.

The Result
Rich Commercial Realty negotiated a significant price reduction and inclusion of office furniture and fixtures in the transaction. API finalized the purchase in time to earn accelerated depreciation and purchased the building at nearly half the cost of what they were looking to spend for a similar space in Raleigh.
 
“Rich Commercial Realty was forward-thinking and went above and beyond what was expected of them to maintain our timetables, which was imperative in getting the deal closed,” said Chris Jolly, owner of Advanced Plastiform, Inc. “They were professional and always available. I felt like our company was their number one priority.”

The Situation
Easter Seals UCP North Carolina and Virginia, based in Raleigh, is a lifelong partner to families managing disabilities and mental health challenges. The nonprofit serves more than 17,000 individuals and their families annually, enhancing the quality of life for individuals and maximizing their potential for engaging in the communities. Easter Seals UCP approached Rich Commercial Realty/KW Commercial with the need to consolidate space between two offices in the Raleigh area. However, the leases expired at different times, complicating the timeline for consolidation. The cost to relocate the offices would need to be a cost factor in the analysis of the transaction.

The Solution
Rich Commercial Realty first developed a market survey of 12 properties that fit the needs of the client and obtained Request for Proposals for the top three properties. By positioning the final properties against one another, Rich Commercial Realty created a competitive atmosphere to secure concessions from the landlord. In order to allow both offices to vacate their current space at the same time to reduce moving costs, Rich Commercial Realty negotiated a hold-over at the same rental rate for the lease that expired first.

The Result
Rich Commercial Realty delivered a 23% savings from first proposal to final lease on Easter Seals UCP’s new space. Additionally, the new lease included significant concessions: free rent, assistance with moving expenses and improvements. The client has all Raleigh-area resources under one roof for streamlined operations.

“Rich Commercial Realty was a tremendous resource for us,” said Connie Cochran, Executive Director of Easter Seals UCP. “We would recommend their services without hesitation.”