A downsize that fixed the operation, cut the rent, and beat the market for 15 years.
In early 2020, Victory CRE moved FlexAbility Concepts from 96,400 SF to 70,000 SF of off-market space on NW 39th Street in Oklahoma City, with a private 2-acre truck court and a 15-year lease at $4.00/SF.
By Tom H. Vaught, SIOR ·
FlexAbility Concepts, 'The Curved Wall People', manufactures patented steel framing shipped across the country. But they were running that operation out of an awkward 'armpit' space in a U-shaped multitenant building: a truck court that was hard to maneuver, not enough dock doors, and a footprint that fought how they actually worked. Their landlord's broker happened to be a part-owner of the building, and he wanted them to stay. The client figured they'd already seen everything the market had to offer.
The problem nobody else would solve.
FlexAbility was leasing 96,400 SF at about $4.15/SF with built-in increases, in a space that worked against them every day: a tight truck court, limited docks, and a U-shaped multitenant layout. The person advising them to stay put had an ownership interest in the building. That's not advice. That's a conflict.
Find the deal that isn't on the market.
The client believed they knew the whole market. They didn't, because the best option was never listed. A local company, RK Black, had just bought a building on NW 39th and didn't need all of the space. I knew it was available before it ever hit the market.
Downsize into something better.
We moved FlexAbility into 70,000 SF, a deliberate 27% reduction, but with a private 2-acre truck court that was theirs alone. That single feature solved the maneuvering and dock problems that had dogged them for years. The rate: $4.00/SF with a modest 2.5% annual increase on a 15-year term. Less space, lower rate, far better operation. First-year base rent fell about 30%, from roughly $400,000 to $280,000.
Lock it in before the market moved.
We closed this right before COVID, which made the buildout interesting, but far more importantly, right before industrial rates surged. By the end of the 15-year term, FlexAbility will still be paying just $5.65/SF in base rent. Market rates have climbed well above that since then. Today, they could sublease the space and make money on it.
The client thought they knew the whole market. The best deal for them wasn't on it. That's the entire point of having someone in your corner who works for you: we find the option the listing agent will never show you, and we time it so the lease keeps paying off for years.Tom H. Vaught, SIOR · Victory CRE
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