The Challenge
BP had closed its combination fuel and Burger King location on Highway 96 in Murfreesboro, Tennessee. The 1.8 acre of land contained one free standing building and a fuel canopy. The location was a major intersection in the best retail section of this fast growing submarket of Nashville.
The issues were:
1. Contamination and remediation from operation of the BP station.
2. A new retail building would have to set perpendicular to Highway 96.
3. The price of the land was above market and significant competition to purchase the property existed from end users.
4. The existing signage did not meet Murfreesboro codes but was critical to the projects success. This was due to its height which made it visible after exiting from Interstate 24 onto Highway 96.
5. The diligence period was only 90 days.
Our Strategy
Although the intended project was only 15,000 square feet in size, the need to quickly organize BSM’s expert teams in marketing, finance, legal and local political relations would be crucial for a successful outcome, especially with the intense competition for the site.
BSM Consulting provided an in-depth demand/gap analysis. The market study concluded Hickory Hollow Mall was losing retail traffic to Murfreesboro and some likely tenants could be relocated to this project.
Although the property was perpendicular to Highway 96, it was located at a signalized intersection across from Target. To the rear of the property was a ring road that connected to Super Wal-Mart, Old Navy, Linens ‘N Things and other notable national retailers. The BSM team felt the retail space farthest from the main road (Highway 96) could be marketed as “the north end cap”. This would be a desirable location if the user was given prominent architectural features and top position on the sign.
Quality regional and national type tenants had to be quickly identified and contacted. BSM had to call upon its existing tenant relationships across the country to see which retailers would commit to the site before BSM had to close on the property.
The legal team of Boult Cummings Conners & Berry was able to use their extensive expertise dealing with environmental sensitive properties to underwrite and quantify the environmental risks that were associated with the project.
BSM principals lobbied Murfreesboro planning commission to allow the large interstate sign to remain and be granted a sign permit through a successful variance process.
Results
Through an effective marketing and leasing process, BSM quickly identified Men’s Wearhouse, who wanted to relocate from Hickory Hollow Mall. Panera Bread and EB Games were identified and were known to be expanding in Middle Tennessee. AAA Auto Club of the South was contacted and discovered they needed to reposition themselves out of an existing center.
Panera Bread leased the “north end cap” subject to a successful variance process for the large interstate sign. BSM was able to successfully demonstrate to the Panera Bread real estate committee that although their space was furthest from Hwy 96, the internal road network to Wal-Mart and the other retailers would provide a successful location for them. Panera Bread opened and maintains above original projected sales.
Letters of Intent were negotiated within a 90 day time period. Leases were fully negotiated and executed. The center was 80% preleased before construction began and opened 100% leased. The project came in on budget and on time. Murfreesboro city and political officials praised the finished project as cutting edge. They also appreciated the team approach and follow through to several problems that arose during the development process.
BSM arranged for and placed a permanent loan on the property at an attractive interest rate which resulted in substantial cash flow. The property was sold to a 1031 buyer from California. The total value created was 4.5 million dollars and represented a yield on cost of 10.25%.
