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Case Studies

New York Organ Donor Network

Problem: The New York Organ Donor Network had 20,000 rentable square of office space at 131 West 32nd Street. They are growing and needed expansion space. Because they are a nonprofit, the idea of owning a property appealed to them, especially if the costs were comparable.

Assessment: The first step in any assignment is to understand the client’s basic needs:

  • Exact square footage they need—i.e. a program (usually done by an architect.)
  • Location requirements. NYODN needed to be near major highways for transportation of organs AND near public transportation for their employees. NYODN could be anywhere in the metro-NY area.
  • Special requirements. NYODN had a laboratory which is prohibited in some buildings because of zoning, certificate of occupancies, and physical incompatibility.
  • Client’s “non” basic needs—the characteristics that really get them excited—architectural distinction, views, bright space with tall ceilings, etc.

Solution: With an understanding of our client’s requirements, the 2nd Step is researching the market for properties that fit their “basic” requirements but also their aspirations. We inspected close to 90 buildings throughout Queens, Bronx, Westchester and Manhattan and made purchase offers on several. We obtained commitment letters for financing the purchase. When we were making the offers, prices were still high and financing fairly easy. When the credit market collapsed, prices didn’t spiral down as quickly as availability of capital. Leasing became a less expensive option. We looked at 20 to 30 leasing options. By using market forces, we negotiate among several options to drive the price to its lowest possible level for a given space. The tenant is part of the process and understands the value of each option and is able to recognize the value of one option over another and can then act quickly. Through this process we were able to secure a long term lease on 30,000 square feet three blocks from their original location.

Follow-up: The last step in our process is making sure the deal negotiated is the deal that is received—making sure that the legal documents reflect the deal struck and making sure the landlord does what it promises it will do. (This becomes less of a problem if you go to a building with an owner that has a good reputation. Through experience, we know who is good and who is not.)

Result: See Press Release | Article

Citibank, NA

Problem: Citibank foreclosed on a 79,000 square foot shopping center in Staten Island. The property had at least a 20% vacancy for several years. Citibank wanted to fully lease the property before they sold it. We were hired to lease up the last 20%.

Assessment: Citibank’s prior agent was a large national real estate firm. The incentive system for a large firm is unhelpful because the commission that would be earned by the brokers working on the assignment was parsed down to next to nothing. By hiring a smaller, competent, more agile firm with the proper incentives would resolve the major problem: NEGLECT!

Solution: A proper marketing campaign with some focused attention yielded immediate results. Deals were in place within 6 months and the property was 100% leased. We leased the available space to two local tenants and two national tenants. It was sold immediately afterwards.

Follow-up: None—a job well done.

Result: See Citibank letter.

Money Media

Problem: A fast growing publisher, Money Media, needed space to expand, but they did not want the burden of a long term lease for two reasons: one, they did not want to carry the cost of unused space; and two, if they were to sell the business (which was their intention) they did not want to be saddled with a long term lease.

Assessment: This is the quintessential problem of a new or star-up business—you are growing fast, the revenues are coming in, but you do not want to pay out money for space when it can be used more productively investing in the business.

Solution: Most often the answer to this quandary is finding sublease space. However, sublease space is sometimes tight and landlords prevent tenants from subleasing. The sublease market can be treacherous. We wanted to find a building that had space today and space in the future for expansion. By undertaking a thorough review of the market we were able to find a building of 350,000 square feet where the average tenant size was around 3,500 rentable square feet.

Follow-up: Money Media was able to move into their new space at a very modest rent and they have since expanded 4 times on successive short term leases. The company was sold to Pearson, owners of the Financial Times. We negotiated the release of the “good-guy” guarantee of the principal of Money Media when the company was sold. He is now travelling!

Result: See Money Media letter.

New York City Mission Society

Problem: A nearly 200 year old nonprofit had accumulated a number of properties. The original programs and purpose for several of the properties had changed—some were underutilized and others required capital infusions. Our job was to identify which was which and implement a program for correcting the situation.

Assessment: A very typical problem for nonprofits because real estate tends to be an afterthought. Oftentimes properties are donated or purchased for specific reasons, but over long periods of time those original uses are defunct, the nonprofit still owns the property and it falls into disrepair because it is not being used for their current services. Similarly some properties become over utilized and are never properly upgraded because there are few opportunities to halt existing programs.

Solution: We analyzed all of New York City Mission Society’s properties including a 1,600 acre camp in Dutchess County, NY, which we quickly focused upon. Most of their other properties were being fully utilized, but not their camp. However, their camp was owned by them for nearly 100 years and had a great deal of sentimental value. We had to demonstrate the benefits of not owning the camp and the opportunities of using the proceeds for their more immediate mission and long term benefit.

Follow-up: We were authorized to market the property which we did with a local real estate expert. The property was sold just prior to the huge price declines of the last 18 months. With their money safely in T-bills, we were asked to serve on their board’s advisory committee to determine how best to invest this money in their other real estate assets.

Result: Property in Dutchess County was sold for $8.4 million. Proceeds yet to be spent.