(To read more on the industrial market, click here.)
WASHINGTON, DC-Mark Ein of Rollingwood LLC has acquired the option to develop land at 1711 First St. SW, some two blocks southwest of Nationals Stadium that is under construction. The property is currently owned by a salvage yard, Super Salvage Inc., one of the few, if not last, remaining such businesses in Washington, DC.
The deal has been structured to provide maximum flexibility to both buyer and seller. The option amount was--according to industry sources--5.5% to 6% of the purchase price, which will be $16.1 million. The terms include a three-to-nine-year window with five years as the strike date--meaning if the buyer seeks to close on the property before five years or after five years, it must pay associated penalties. The option price--between $900,000 to $1 million--is non refundable, paid annually and not to be included in the purchase price. Bidding for the property had started at $15 million and the option price at $750,000, according to sources.
The deal structure meets the business needs of both buyer and seller, says Ari Firoozabadi, an associate in the Washington, DC office of Marcus & Millichap Real Estate Investment Brokerage Co.'s national multihousing group. Marcus & Millichap represented both the buyer and the seller.
"The salvage yard is benefiting from the real estate boom in Southwest right now, driven by the stadium and other projects," he says. "It makes sense for the company to remain in business for the next three to five years."
The buyer, for its part, has the options to the property and can wait for the area to develop to the point where it is profitable to begin building. "It doesn't make sense for him to develop the land within the next six to 12 months," Firoozabadi says. "Most real estate professionals, including myself, think that this area is two to five years away from becoming vibrant enough to develop."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
