Courtyard by Marriott
We acquired the Center City West Parking Deck, a three level parking deck consisting of 730 spaces located at 650 West Fourth Street, from the City of Winston-Salem in 2016. The acquisition came with city imposed conditions, the first of which was to develop $20,000,000 of real estate within five years of purchase, and secondly, such development be located within 2,000 feet of the parking deck. We acquired the adjacent parcel, 640 West Fourth Street, as an office development site that would assist in meeting the development requirements of the parking deck acquisition.
Due to increasing office vacancy and declining office rents in Winston-Salem, it became obvious that existing market rents could not support new office construction. The development challenge was to identify a product type that provided reasonable returns for investors, generated additional need for the existing parking deck, and ultimately satisfied most, if not all, of the imposed development conditions set forth by the City of Winston-Salem.
After almost a year of negotiations, we were able to secure an approval from Marriott International, Inc., to develop a Courtyard by Marriott. Construction has commenced and completion of the hotel is anticipated in the third quarter of 2019.
In 2004, as a result of the Wachovia/First Union merger, the 230,000 square foot Park Building in downtown Winston-Salem, NC, became available for purchase at a price below replacement value. The seven-story office building was a Class A asset developed by Wachovia for their own use and featured an open atrium with views of a public park and attached parking deck with 600+ spaces.
The challenges were as follows:
- Located in Winston-Salem, NC, a tertiary market that had more than 500,000 sf hit the market as a result of Wachovia/First Union merger;
- Declining rental rates, space absorption and job growth within the local market;
- Conversion of the building, originally designed for a single tenant, into to a multi-tenant property; and
- Adding amenities to be competitive in the downtown market such as a fitness center and food service.
Utilizing an aggressive proactive marketing approach, 100% occupancy was achieved in less than 18 months. Ownership enjoyed ten years of positive cash flow and eventually sold the property in 2017 to an existing tenant, a prominent corporate citizen of Winston-Salem, leading to a 1031 exchange acquisition opportunity for the ownership.
Commercial Realty Advisors was retained by Wells Fargo N.A. to divest their High Point headquarters located at 200 – 208 North Main Street. The facility consisted of a four-story, +/- 36,251 multi-tenant Class B office building constructed in 1963 on +/- .72 acres. Commercial Realty Advisors utilized their intimate market knowledge to advise Wells Fargo to list and position the asset as a potential furniture showroom.
Commercial Realty Advisors was aware of potential development ordinance changes by the City of High Point that could have had an adverse effect on marketing the property. The proposed changes included transitioning from Central Business (CB), which permitted showrooms, to Mixed Use (MX), which would eliminate the ability to utilize the building for its “highest and best use” as a furniture showroom. The future use of the property as an office building of any type was highly unlikely due to a very weak office market in High Point, in addition to offering the lowest return for Wells Fargo.
Commercial Realty Advisors proactively contacted potential furniture showroom buyers and commercial real estate brokers active within the showroom market to present the property. Several initial offers were received and the property was immediately contracted; however, the group eventually opted to build a larger facility on an adjacent parcel. During the listing period of approximately six months, the property was under contract with two subsequent buyers with the third buyer, a real estate group associated with Made Goods, closing in the Fall of 2017. The sale was completed prior to the development ordinance change, allowing the use of the property as a furniture showroom and resulting in a sales price significantly higher than the appraised value.