Regularly optimizing your corporate real estate portfolio ensures that your CRE ultimately supports business goals. And as you evaluate the assets in your portfolio, you may realize some are unsupportive.
Unsupportive assets do not enhance key business objectives, including your company's business strategy, operational efficiency, talent retention and acquisition, and financial targets and goals.
To manage unsupportive CRE, many decision makers turn to disposition. With a well-executed strategy, disposing unsupportive assets invigorates cash flow, minimizes operating expenses, and decreases liabilities.
Continue reading to learn more about top disposition sales methods and tips to accelerate the process.
When managing unsupportive assets, various strategies and options become available. Evaluate your real estate criteria, market conditions at the time of sale, occupancy, and property type to find the best approach for your circumstances. The methodologies and details for five common strategies are listed below.
The most common strategy for disposition is a traditional sale. This option involves you and your commercial real estate broker settling on a price, marketing the property, and choosing a buyer to complete the sale.
A call for offers strategy is ideal when you know there is substantial demand for your property. A closed-bid situation builds competition among interested buyers and adds additional value to your property. This approach enables an apples-to-apples comparison of offers at a predetermined time - review the proposals at the bid deadline and pick the best possible deal.
Research has shown that sellers earn more in commercial property transactions when an asking price is not included. In these instances, interested buyers visit your property first before discussing a price.
When a prospective buyer does not secure a lender or third party support, they can negotiate monthly payments to the seller instead. In this scenario, you won’t receive one lump sum at the time of sale, however, you do have the opportunity to earn interest on the loan—likely earning more money over time.
Property auctions make the most sense for sellers who are in a rush to sell a property. Remember that setting up a property for auction requires marketing. You want to ensure that potential buyers attend the auction.
While many property actions occur in person, virtual auctions have become increasingly popular. Platforms like Tex-X make it easy for sellers to dispose of unique assets that may be of national interest.
Although commercial real estate dispositions are often major transactions, there are a number of ways sellers can expedite the process.
Remember to prepare all necessary documents and ensure that they’re organized. Consider leveraging a file hosting service like DropBox to manage and organize essential documents and information—especially if you oversee a multi-property portfolio.
Ensure that you have all of the materials and paperwork that a prospective buyer needs to review during due diligence. These documents include the following:
Respond quickly to offers from prospective buyers. Some businesses are tempted to put an offer on hold to negotiate a better deal, but this will only delay the disposition. You risk losing your buyer when you don’t respond promptly. Responses between you, your real estate advisor, and your potential buyer need to be timely and clear. Ensure everyone receives vital information and feedback constantly and without delay.
To set realistic expectations and conduct fair negotiations, it’s critical to understand current market conditions. Factors like comparable sale prices, competitive properties on the market, fluctuating inflation, and the interest rate environment may all impact the speed of your transaction.
Quickly and successfully managing a disposition can be nearly impossible without the right team in place. For support with listing, marketing, negotiations, and organizing documentation, consider partnering with an experienced broker.
Executing an effective CRE disposition for unsupportive assets not only creates cash flow, but also reduces unnecessary expenses for your business.
Corporate real estate optimization is fundamental to achieving your business goals and responding to new challenges. Learn more about assessing your existing portfolio and identifying unsupportive assets by downloading our free guide, Portfolio Optimization: The Essential Corporate Real Estate Guide.
