.png)
Summary
I am interested in the truth. If the market is good, I need to know. If it is horrible, I NEED to know. There are three incredible success stories of real estate professionals who have stayed IMMUNE to this rough market we're in and the common thread that pulls through each of these stories. I’ll give you a hint: I started commercial real estate in 2017 and am now seeing what happens when property owners are forced to weather the storm of a down market for numerous years. They say you make money when you buy a property. Keep reading to find out why.
This Landlord was immune from sudden vacancy
First, a landlord group along the 495 beltway experienced an abrupt vacancy on a Class A, Flex/Industrial/R&D property they have owned for a decade. The tenant declared bankruptcy, bailed on both a build-to-suit new lease they signed elsewhere and this property owned by the landlord group aforementioned. The tenant criminally stripped out the copper, took the most valuable equipment in the middle of the night, and a few of the employees started a company 20 minutes in a cheaper rent district to try to resurrect their dead business.
This sounds like a nightmare situation, and in a sense, it was. But do you know what happened? Ownership started showing it immediately, and is moving downfield on a lease agreement with a prospective tenant. They can afford to undercut the market rents by 20% to get a tenant back in the space. Why is this a success story? Ownership has a majorly reduced cost basis and can afford to do this deal because they bought the property at the right price.
This buyer is immune from unreasonable sellers
The second story is of a buyer client in search of numerous acres of Industrial Outdoor Storage (IOS) as a large maintenance and storage facility in a different part of 495. An ownership group was quietly marketing a site for sale as a development site looking for a joint venture partner to buy a share of the property to help them speculatively develop an industrial property with no tenant. Our client is a financially strong buyer who is ready to act, but wants nothing to do with a joint venture. They made a strong, bona fide offer to purchase 100% of the entire property, and it got traction.
Why are they getting traction when the seller was not looking for this kind of deal? They have money, they don’t overspend, they know what they are looking for, and they move decisively. Financial strength begets strong real estate transactions.
This owner is immune from tough market conditions
The third story is of an owner who has a property in a moderately hot market in an altogether different part of 495 from the two above stories. This ownership group is about to take the property to market – it is a quintessential IOS property. Prescott IOS has shown the property 4 times before we listed it. Ownership’s cost basis is 25% of the market value. This means they have a massive amount of equity sitting in the property. If they sell below market, they win big. If they lease below market, they win big. This group is in a position where it is very difficult to lose.
According to CoStar, industrial vacancy in Greater Boston has reached a 10 year high. While the owners, buyers, and tenants who own and lease properties at conservative valuations are not totally immune in downturns in real estate markets like this, they are in strong positions.
Self-restraining wisdom is like a tree planted near a stream of water
Real estate markets are like real life. If you do the self-restrained thing when times are good, you may miss out on “fun” opportunities. However, when times are tough, self-restraint may save you. The wise, self-restrained real estate developer is like, as the Bible says – a tree planted by a stream of water. It yields fruit in its season. It may not be like a pine tree that shoots up quick and tall, but when the winds blow and the ice storms come, that tree will live to fight another day. Be like the wise, self-restrained real estate professional.
Also, buy Industrial Outdoor Storage (IOS) whenever you can, and call Prescott IOS if you need help with the opportunity.
How Prescott IOS can help YOU
Prescott IOS is New England’s only brokerage dedicated to leasing and selling Industrial Outdoor Storage (IOS) real estate. If you need to find IOS property for your business, or if you own IOS property and want to better understand its value, email help@prescottios.com or call (617) 999-0057.
.png)