After a fruitless year and a half search with another real estate agent, the client contacted SCRE with an unusual request. The client’s company had projected a growth of 5% per annum and actual growth was running at 18-20% per annum. The company’s needs were for 10,000 square feet of office and 5,000 square feet of warehouse. A standard warehouse configuration in a 15,000 square foot facility would be a ratio of 3,000 square feet of office and 12,000 square feet of warehouse.
The company’s operating ethic required a unique and first rate office environment. The standard of care for their employees included hosted lunches on Fridays, first rate finishes and flexible hours of operation. Their target location was Seattle.
It was determined early in the process that the acquisition of a warehouse and the creation of more office space than the norm was not a viable alternative. It was also determined that to find suitable alternatives, the search would require us to look at areas other than Seattle.
The problem was solved by a uniquely constructed four-story concrete office building in Bellevue. The market conditions generated multiple offers on the asset and since the client’s intent was to acquire by financing through an SBA loan and the majority of the building was vacant, it was not feasible to buy and close immediately. Additionally the subject property had material issues of deferred maintenance and functional obsolescence. With a competing all-cash offer in place behind the client, we addressed the problem with a unique solution.
We leased the building and took an option to buy at a fixed price in excess of the all-cash offer (which was less than the asking price). We then:
- Tendered option consideration with the agreement that the money be spent on lobbies and common area upgrades.
- Obtained the seller’s commitment to do all future leasing to the “building standard” established by the Tenant/Optionor’s finishing standard in their premises.
- Found suitable warehouse space within a few blocks of the building.
Through this process we solved our client’s immediate needs, addressed future growth and their desire for ownership.
