A Commercial Challenge
A broker-owner needed to sell an office building that had been on the market for two years. Online classifieds and a price reduction did the trick.
December 1, 2008
Square footage: 12,000
Lot size: 1 acre
Year built: 1967
Extras: Good location, close to business corridor and transportation hubs.
THE CHALLENGE: Gregory P. Schenk, SIOR, broker-owner of the Columbus, Ohio-based Schenk Company Inc., an exclusive tenant representative brokerage and commercial real estate advisory firm, had a big job on his hands. In November 2007 he agreed to list a commercial office building that had three stories, no elevator, a 19 percent vacancy rate, and numerous properties for sale within a 2-mile radius. “It had previously been listed by a major firm that tried for two years to market it,” Schenk says. Now, it was his turn to get it sold.
How did you get buyers interested?
SCHENK: The building had good potential but it hadn't been marketed properly. It was previously listed with a big real estate company that just didn't have the time to devote to it. They basically posted for-sale signs and waited to see what happened.
We don’t even use signs. We try to keep our finger on the pulse of the local market and broadcast e-mails to people who might have an interest in the property.
On this listing, our first move was to get the seller—a financial group out of New York—to do a price reduction of about $100,000. I told the seller that price is a function of demand and time and this was based on what we thought the property was worth, what it would sell for, and what repairs needed to be done.
The seller had been leasing the building to a local firm that used it as a corporate headquarters but had acquired another facility to meet its needs. So with the current tenant moving and taking that lease income, the seller was motivated to accept my suggestion.
What was the selling price?
SCHENK: I listed the property for $575,000 in November 2007. It closed Feb. 10, 2008 for $510,000.
Tell us how you got this listing?
SCHENK: Through a referral. We are a big relationship firm. Someone I knew called to tell me that the seller had listed the property with a large real estate company with no luck and asked if there was something I could do. I talked to the seller, and I was confident I could get the job done.
How much did you spend on marketing?
SCHENK: Almost nothing. I posted the property on Craigslist.com and put out some feelers to my contacts.
How many times did you show the property?
SCHENK: I showed the property three times.But the buyer came to me through another broker who read the Craigslist.com advertisement. The company had three different divisions and planned to put a business unit on each floor.
What do you attribute to closing the deal so quickly in a tough market?
SCHENK: Getting the seller to understand market conditions and lowering the price. Those were the two main factors.
Tell us a little about your business. How many transactions do you oversee annually?
I serve about 30 clients each year. I got started in commercial real estate in Columbus, Ohio, in 1986. I set some high goals and gave myself two years to make it. If it didn’t work, I would move back to Los Angeles.
Within two years, I had hit all of my goals. I started my own firm in 1996, representing tenants, buyers and investors, and I was teaching, training and speaking nationally. In 2006, I won the Micro Entrepreneur of the year award winner for real estate in Central Ohio. And I am part of the REALTORS® Commercial Alliance 2009 Signature Series.
What lessons did you learn from this transaction?
SCHENK: I realized that now more than ever, people really need us. What I always say is that people need advisers and consultants first, and resultants second.
I am not here to sell anything. I advise and consult first. I put together a strategic plan. And then I help surround my clients with all the people—such as the real estate attorney, commercial banker, accountant, contractor, architect, and project manager—they need to implement that plan. The days of putting up a sign and hoping for the best are gone.
Do you have a "How I Sold It" story of how you used savvy marketing and sales techniques to sell a challenging property? To be considered for a future column, send an e-mail to REALTOR® Magazine Online. You must be able to supply a photo of the property.