Case Study: 601 Front St

Challenge

601 Front St was a property that had a single-tenant lease with a near-term rollover that posed a binary leasing risk to a potential buyer. Given the market’s overall state, the agents felt that the property had a strong likelihood of being able to retain the tenant and complete an early renewal, as there were minimal options for an equally functional site.

 

Strategy

The agents’ ability to diagnose market conditions led them to approach the tenant early for a renewal, which allowed for the tenant’s renewal to occur over one year in advance in much stronger market conditions for the landlord. The agents’ understanding of the market allowed them to capitalize on this and renew the tenant at $1.53 NNN on a new 5-year lease with no concessions or tenant improvements. During the escrow process, the agents remeasured the building with a BOMA calc and were able to grow the building over 8.0% of RBA.

 

Results

The tenant was able to be renewed within a window of time that allowed for the greatest amount of market upside for the Landlord and locked in a solid multi-location tenant for the mid-term future, securing their investment moving forward. This is over a 7.0% stabilized cap rate within the first 15 months of investment.