Redmond Historic Building
Redmond Historic Building Purchase and Rehab
Class A location. Historic building with good bones. Immediate area was being rapidly redeveloped.
A case study on turning a dilapidated vacant historic building into a fully occupied revenue generator.
Redmond was a single-story 6,800sq. ft. brick historic building built in the heart of downtown Redmond in 1906. Over the years the weather and elements took their toll on the exterior of the building. The owner asked us to sell it on his behalf after the only tenant decided to close down their business.
The sale of the building was going to be a real challenge since the previous tenant had vacated and the building suffered from age-related issues – including not being up to seismic code.
If we were going to successfully rehab this property and sell it on the market, we knew there were multiple major challenges that would require creative solutions.
Executive Summary
- Owner of the historic Redmond building asked us to sell on their behalf.
- Building was vacant and internal square footage too big for most companies.
- Building suffered from multiple age-related issues such as rotted windows and not being up to seismic code.
- Due to the building being on the historic register, any improvements would have to go through a rigorous approval process by the city.
- We tried to sell the empty building “as is”, but the deal fell through under contract. A new approach was needed if we were going to recoup our investment.
Challenges
The building had no tenants and finding someone willing to occupy the entire 6,800 sq. ft. building was going to be a huge challenge.
We tried to sell the building as is, but first contract deal fell through. It soon became clear that we needed a better solution.
We realized we would have to perform extensive upgrades - including fixing the rotted wood windows and bringing the building up to seismic code.
Due to the building being on the city historic register, all proposed improvements needed to be approved by the city. This added a layer of complexity to an already complex project.
The Solutions
While the historic red brick building had multiple issues that needed to be addressed, it also had a lot of character and the bones were great.
The entire area was undergoing a massive redevelopment that included new buildings and roads on the thoroughfare. We realized that we could increase the value and turn this building around if we purchased it.
We first decided to split the building into two separate sections as it would be a challenge to find one tenant willing to occupy the entire space. The first tenant that came along expressed interest in buying the building with us as 50/50 partners.
We then addressed the multiple interior and exterior challenges such as repairing the original historic windows, applying seismic retrofit upgrades, and working closely with City Hall to ensure our plans were approved.
The Results
The Redmond historic building was fully renovated making it water-tight, a new HVAC system was installed, and seismic upgrades were added.
We achieved a 100% occupancy rate by dividing the building into two – which in turn generated more rent.
Our due diligence was spot-on so there were no surprises above and beyond the issues we originally identified.
Because of the uniqueness of the building, and it occupying an area that was being rapidly redeveloped, we accepted a slightly lower return on initial projections based on the long-term value.
In just two short years we were able to go from a vacant building that required extensive upgrades to a fully rehabilitated and seismically upgraded office structure with 100% occupancy.
About Azose Property Management:
Since 1976, Azose Property Management has been involved in the buying, selling, and management of properties in and around the Seattle area. Over the decades we’ve put together many investment groups which have provided our investors excellent returns in a short period of time. Contact us today to learn more about potential investment opportunities
