90 Madison, Denver
The Challenge
The U.S. Government Pension Benefit Guarantee Corporation (PBGC) took over a Denver building that was occupied at just 20% and badly in need of renovation. (The PBGC is the FDIC of pension funds.) In agreeing to serve as leasing agent and asset manager, Bartell Meitus Real Estate believed it could fully lease the building, but only if the PBGC committed to upgrades that would bring it to market standards. In addition the PBGC, like many building owners, was convinced that holding firm on lease rates was the best way to ensure the value of their investment.
The Solution
Our first step was developing a plan to immediately renovate the interior and front entry façade of the building. Our construction expertise ensured both the quality and cost effectiveness of the work.
Next, we educated our client on the concept of leasing for maximum value. We explained that roughly 75% of every rental dollar goes to the bottom line. A new tenant brings an increase of 25% in variable costs; the rest is fixed cost. This makes it more important to get tenants in quickly, effectively increasing cash flow by 75%, than to hold out for the last dollar from each tenant. Through cold calling to a “smart” database list of targeted, qualified prospective tenants, Bartell & Co. was able to raise and maintain occupancy on this building from 20% to between 90-100% over a four-year period. With increased value, the building was subsequently sold.
Throughout the four-year period, Bartell Meitus Real Estate adhered to the strict reporting and financial return requirements for both client and realty advisor. Our knowledge in this area led to a continued relationship on other PBCG projects.