Listing Analysis: Two Buyer Types Well-Suited to Purchase CEMEX Building, West Palm Beach
Asset of Interest
The visually recognizable CEMEX building nearby the Palm Beach International Airport was recently listed for sale. REMCO performed a brief analysis of the property based on its listing on Loopnet.com.
Read on to learn about the optimal buyer types for this property as well as the details that may apply in their respective situations.
Ideal Buyer Types
Presuming there aren’t any major issues on site (which need a Property Condition Assessment and an Environmental Site Assessment report to be uncovered), this asset has two ideal buyers:
An owner who would use all or a large portion of the building’s capacity for business operations, or
A well-capitalized investor with holding power of at least two years
Buyer Type #1
For the owner who will use the building as an operating asset, the building is a wise selection because it offers all the amenities needed to occupy the office immediately, such as:
The Cemex Building located at 1501 Belvedere Rd, West Palm Beach, FL, 33406
Source: Loopnet.com
Five floors of office space and a basement
Generator, CCTV system and redundant fiber optics
Brand new heating, ventilation and air conditioning system (replaced in 2020)
Great location with access to I-95, the Palm Beach International Airport and the West Palm Beach and Magnolia Commuter Rails
Buyer Type #2
For the investor, the same amenities that are great for the user will apply. However, when acquiring a non-operating asset (an asset that is not used to facilitate daily operating activities), there are further considerations to take, such as:
$3.75 million initial out of pocket investment (including the 25% down payment and closing costs)
Hiring of salaried property manager to take care of daily property maintenance activities
Hiring of leasing agent to lease out individual offices on floors one, two and five (which layout offers immediate leasability)
Hiring of leasing agent in conjunction with a broker to lease out floors three and four as entire floor leases. These entire floor plates require creativity and capital to be transformed into specialized spaces or an executive suite.
Hiring a leasing agent to lease storage space in the basement to tenants or consider outsourcing to a storage company who would administer the space completely
Burn rate of around $950,00 per year in anticipated operating expenses
Tenant Improvement and Leasing Commissions (TILC) and Capital Expenditures (CAPEX) requirements in first years are subject to the tenants secured; presume around $2-2.5 million
With these factors considered, the investor’s total cost to acquire and hold the asset is around $7.5 million over the course of two years. Presuming lease rates, operating expense rates and vacancy rates are $30-35 per square foot, $12 per square foot and 5 percent, respectively, the third year’s net operating income (NOI) would be at least $1.55 million (with potential for growth, if choosing to invest in executive suites).
In conclusion, there are situations in which an investment may be beneficial for certain buyers over others. It is the position of an asset manager to help assist an investor with decisions in purchasing and selling properties.
Please note, this property is listed for sale by Berger Commercial Realty.
This property’s listing analysis was performed by Lisa Gerard, licensed real estate broker and founder and principal of REMCO Commercial Real Estate Solutions. For information regarding more in-depth listing and asset analyses, please contact us by email or phone.
The above is a brief analysis of the CEMEX listing’s details as they may apply to two determined buyer types. There may be scenarios in which the two determined buyer types may not be the best fit, or in which other buyer types may be a great fit.
