5821 Harper Road, Solon, Ohio is a 66,000+ square foot, 1970s construction flex/office building that ownership was looking to sell out of a portfolio sale.
Hackman Capital, an investment firm based out of Los Angeles, purchased a large state wide portfolio in Ohio for $90+ million in June of 2013. Some of the assets in the acquisition were outside of their realm of ownership, including 5821 Harper Road in Solon. This was an older, flex/office building, where-as their fundamental acquisition is more towards the new, larger, distribution buildings.
The building is located in an A+ location, but is a C+ building. Low ceilings, tight parking, 1970 facade, short truck court, which all led to high vacancy in the building. Ownership had to weigh the cost of leasing the building in its as-is condition, redevelop the property to attract more tenants, or sell the building out of the portfolio.
“Terry knows the market and the area and because of that expertise, he was able to appreciate the value we believed the building had. He was successful in matching us up with a Buyer who also shared our thoughts and we believe the sale and redevelopment will be a win for the new owners, city, and future companies in the area.”
– Ben Struewing, Vice President, Hackman Capital
Terry and his team took the building to market for sale, while continuing to market the building for lease. The anchor tenant had a lease expiring soon after acquisition Hackman had to decide if they wanted to keep them at below market rents or allow them to leave to redevelop the building into a higher rent, better class building. The tenant left the building and NGKF had to sell the building on the basis of redevelopment which would require a large outlay of upfront investment by a new owner, in turn garnering higher rents. Terry garnered a lot of interest at significantly below market sale prices. He had to find an investor/developer who would appreciate the location and foundation of the building with the foresight to see the potential the building could offer.
With the negotiation of existing FF&E, assistance and cooperation from the city for improvements to the building and site, Terry found a local investor/landlord who also saw the potential the building could offer. The building sold in December of 2014 and the redevelopment of the property to be finished end of 2015 ready for occupancy of new lab/office/research tenants.