2130-2160 E Brown Road – Office & Medical Space
This 12,000 square foot multi-tenant office/medical building had quite a bit of deferred maintenance. The building was 40% occupied at the time with most tenants on a month to month lease and below market rents with average lease rates of $9.00 PSF and not well positioned at all in the market to lease or sale. The landlord Hired me with (2) goals in mind. 1. Increase occupancy
2. Increase the property net operating income and reduce expenses.
Commercial Properties Inc. (CPI) was hired by the landlord to evaluate their leasing options. As part of this assignment (CPI) conducted a study to address the property operating expenses and find ways to reduce expenses and be more efficient. (CPI) found that by installing a water saving efficient irrigation system we could reduce the CAM charges by 30%. (CPI) also reviewed the current leases on file and looked for opportunities to stabilize the current tenants and increase income where there were opportunities. (CPI) Negotiated with current tenants to renew their leases to either a 3 year or 5 year term and provided a TIA for improvements and/or rent abatement in lieu of an extended lease term at market rents ($12.00 PSF).
• CAM charges in 2018 were reduced from $11,060 to $7,656 in 2019 by installing a water saving efficient irrigation system saving the landlord 30% on his CAM charges.
• CPI increased the current in place rents from $43,200/year to $57,600/year increasing the property value by $205,714 based on a 7.0% cap rate.
• CPI increased the occupancy from 40% to 95% with 3-5 year leases at market rents of $12.00. increasing the annual rents from $57,600 to $111,308.
• With CPI reducing the property expenses from $39,209.30 to $30,161 a year and increasing the rents we were able to increase the NOI to $81,147
• CPI was able to sell the property for $1,200,000 (6.76% Cap Rate).
“After owning the property for over 20 years I was able to hire Michael to help me work with my existing tenants and review the property’s operating expenses and help bring my occupancy up to 95%. I have been well pleased to work with Michael over these past couple years, he’s a pleasure to work with and has a strong work ethic.”
– Don Crawford