Good asset management quickly recognises the potential in any property as we demonstrate here through our work on a 1.768M sq m mixed use scheme in the town centre at Iselohn in the federal state of North-Rhine-Westphalia.
A problem property
When we took over this property, it was clear that we needed to think laterally. We had 41 per cent unoccupied, three floors vacant and the only retail occupier at ground floor planning to move upon lease expiry. The property was valued at €650,000.
Tenant poised to leave
The retail tenant was a major drugstore operator who had expansion plans in mind and who believed new premises were required.
However, when we talked to them and learnt about their ambitions, we were able to offer them an alternative that would see them staying in our building.
The empty space which had been regarded as a problem, suddenly turned into a benefit as we worked with them to create additional premises for their use on the first, second and third floors to create a medical centre. Then we considered developing the upper part of the building for residential, obtaining assisted finance.
The best outcome
This resulted in the tenant taking a 10 year lease extension and investing €1 million in the building to fund the improvement works for their space. This we achieved at the same rental (index linked) and with no rent free incentives.
We are currently also in negotiations with a local developer who has offered €990,000 to develop the new residential element at the property. If this deal goes through the value of the building will have risen by 50 per cent in 12 months.