Distressed
Office Buildings
What are your options for a distressed office building?
Consider repositioning it with multifamily entitlements.
Many of these older buildings are located in excellent multifamily submarkets and thus the value of the property is actually in the land. That value goes up significantly if its already entitled with multifamily entitlements. "Conversions" rarely make sense unless they are a high-rise building and located in high barrier-to-entry submarkets.
Again, the value of land with multifamily entitlements increases by 25-50%. Sometimes those values can reach $1 Million to $2 Million per ACRE of land.
Lenders and Sponsors
Let us help you determine the financial feasibility of repositioning your non-performing office building. Some sponsors and lenders are “hoping” things will improve in the office market. Hope probably isn't the best strategy. Now is an ooportunistic time to reposition your assets with mulltifamily entitlements. The housing shortage isn't going away anytime soon, so multifamily development still has a decent runway.
We think the recovery to the office market is easily 3-5 years away and many of these buildings will need significant renovations and investment to bring them up to standard. Call for a free analysis of your office or commercial building.
There Are Potentially Three Buckets of Money in a Distressed Office Building
Land Value
The Value of the land to a Multifamily Developer. We've kind of already covered this in depth.
Long Term Leases
Long term leases from national companies who are either trying to sublease their space or who want to terminate their lease for a fee.
Defeasance
If the building was financed with a CMBS loan, potentially there are proceeds from terminating the loan early. The smallest of the three buckets.