The commercial investment and management firm had four sections of their portfolio they decided to sell in July 2022, awarding each section to separate brokerages. A nine-building portfolio totalling 71,000 square feet on Camelot Drive was awarded to Koble Commercial Real Estate & Brokerage.
The problem though, was a shifting market in which interest rates were rising, demand for investment commercial real estate was low, “and more specifically, office was a tough asset class to sell with the state of work from home in flux,” says Koble partner and broker Graeme Webster.
On top of that, one of the larger buildings in the portfolio was vacant, which presented a challenge, and Koble would be going to market at the same time as the three other parts of the portfolio, flooding the market with similar properties and creating an oversupply of product.
“We brought them to market in the fall of last year when conditions were still evolving and interest rates were rising rapidly and people were concerned about what was going to happen,” notes Scott Watson, Crown Realty Partners managing partner, leasing and acquisitions.
To combat the challenges, Koble executed detailed due diligence and analysis, recommending that the buildings be sold as a package to appeal to more buyers who were active, and that the vacant building be leased (there was an existing tenant interested in expanding into the space). Koble then created a thorough marketing strategy to have both broad coverage and to reach the most active buyers that the brokerage had experience with, Webster says.
“We called every active group on the list and made sure they understood the opportunity. The ultimate buyer had not been active in purchasing in Ottawa for years, which is evidence of how we really spread out and attacked the local buyer group in Ottawa.”Graeme Webster - Partner at KOBLE Commercial Real Estate Inc.
Koble has unmatched local relationships and an exclusive list of Ottawa buyers that numbers more than 2,000 in their database — something others do not have access to. “From that we had enough interest to create a competitive situation in a tough market,” Webster says.
Matthieu Urbain, who is director of acquisitions at Crown Realty Partners, points to that connection to the local buyer community as a key differentiator. “Their reach across the market is very wide and they have access to lots of different buyer pools, so they were able to cast quite a wide net. That’s where they brought a lot of value to the table, in a market where the pool of buyers is thinner and thinner.”
As the process unfolded, Urbain says it became clear that Koble’s “relationships with the local market, which included the buyer, were very entrenched and went a long way. They were real and it was a much more personal approach to the deal execution, and I think that helped.”
Koble’s due diligence continued once potential buyers were identified to ensure the chosen buyer was qualified and would be able to move forward with the transaction. That due diligence included maintaining constant contact to confirm they were meeting timelines and removing hurdles throughout the process.
The communication was just as constant with the vendor.
“Throughout the whole process, Koble was on the calls, they were in the middle of discussions, they were managing expectations very well from both sides,” says Watson. “They communicated well, they kept on top of the deal. When the agreement of purchase and sale was signed, they didn’t run for the hills, they were active in getting across the line for sure. As a vendor, that was very much appreciated. Sometimes we have the opposite experience where an APS is signed and then the agents are nowhere to be found.”
Going to market in mid-October, sold by Christmas, for a favourable price, “which a great result for the client especially in this market,” notes Webster.
Urbain says that not only will his company work with Koble again, “We’re actively working on some other strategies with them right now.” And while Koble wasn’t necessarily top of the list for Crown before this successful transaction, “I’d say they’re probably top of the list now, or right up there.”
“A lot of times, institutional owners discount whether local shops and local brokerages can provide the same level of service and actively trade, and tend to lean on the bigger firms. Koble can definitely compete with the bigger firms."- Scott Watson, Crown Realty Partners managing partner, leasing and acquisitions
Watson continued “Different investors should be open to having them in the room because they can provide the same service and same execution as they did for us. I think that’s a huge part of being a local, smaller service provider, that you get stuck in the ‘we’re just going to go with the big ones first.’ I think they did a great job.”
Sometimes making the sale is all about being willing to do enough digging. That was certainly the case for an Ottawa property that Mackenzie Investments had had trouble selling in the past.
The 66,000-square-foot industrial facility was previously packaged in a larger portfolio with a different broker but was discarded because it was something the buyers didn’t want to take on, explains Mackenzie assistant vice-president Andrei Novak.
What should have been an easy sell thanks to the demand for industrial property was made difficult due to environmental challenges that had lenders balking, adds Graeme Webster, who runs Koble Commercial Real Estate & Brokerage with business partner Marc Morin.
“I had a couple brokers trying to kick the tires and bring different players to the table with unrealistic demands,” says Andrei. “when Koble’s team came in, they spent time to understand what the property’s issues meant. They spent their own time, not getting paid, to understand and get themselves educated. They dug really, really deep before they produced advice for me.”
Graeme Webster - Partner at KOBLE Commercial Real Estate Inc.
Their advice and strategy led to strong offers from multiple buyers on a property that had proven to be a challenge for Mackenzie.
But before that could happen, a lot of preparatory work was required, starting with Andrei. When the asset was discarded from the earlier portfolio, he needed to bring in consultants to assess its condition, a process that took several months. Graeme and Marc, who reached out to Andrei about taking on the sale (while the consultants’ environmental reports were in the works), were patient, staying in touch with Andrei throughout.
Once the reports were done, the Koble team dug in, taking a deep dive into them to thoroughly understand the complex and technical details. Their research, which took about two months, included multiple calls with each of the report’s authors — some of whom had conflicting conclusions — and even gathering them in meetings together to reach a consensus.
All of that research allowed Koble to become experts on the issue, which would serve them well when it came time to approach prospective buyers.
“Not a lot of brokers are either capable or willing to do that,” notes Andrei.
Also helping to overcome buyer objections was Koble’s wise move to help lenders truly understand the value of the property.
“We approached several lenders to discuss the report findings and explain in detail what the implications were and, in doing so, some of the lenders agreed to approve a loan on the property,” says Graeme. “When needed, we will go so far as to get an environmental report writer and the lender at the same table to have a real conversation to fully understand the issues.”
With all their preparatory work done, rather than take the property to the market in general and risk deal fatigue on a site that had already been on the market previously, Koble advised a strategy of an invited tender process, using a narrow approach to identify a select group of buyers, Graeme says.
Leaning on its experience and knowledge of who’s active in the local market as well as who would have the wherewithal to take on the considerable challenges, Koble approached a selected list of 10 of the best buyers for this type of property, walked them through all the details, helped them interview the environmental consultants, worked with their lenders “and brought in three or four bids on a property that hadn’t seen any in the past,” he says.
This case is a prime example of how embracing a challenge in order to best determine how to position it and sell it and to whom, goes a long way toward a successful outcome, says Graeme — but only if you take the time to really dig into it.
“We really did take the time to understand every aspect that could become an obstacle and, to a degree, we solved it ahead of time, invited in the right buyers and then executed on the plan.”
Andrei doesn’t think it’s an approach a larger national brokerage would have taken with a comparatively small asset.
“Larger firms may adjust the level of service they provide for that volume of a deal, whereas with Koble, the size of the deal didn’t matter, the level of service is still the same, the level of focus on doing what needs to be done and providing advice to me as a client was still top-notch.”
“We’ve done multiple deals with Koble and the size of the deal didn’t matter, the level of service is still the same, the level of focus on doing what needs to be done and providing advice to me as a client was still top-notch."- Andrei Novak, Assistant Vice President at Mackenzie Investments
This is the second successful transaction that Mackenzie Investments and Koble have worked on together and he wouldn’t hesitate to hire them again.
That’s the situation J.L. Richards & Associates Limited (JLR) faced recently. The well-established engineering, architecture and planning firm had been at the same location since 1960, a prime piece of land next to the Queensway and across the highway from the iconic gold MNP building (formerly the Corel building) and Dymon Storage. Over the years, the company had outgrown its building, spawning two satellite offices and serious discussion about building a new facility on the parking lot adjacent to the existing building.
Then the pandemic hit and new possibilities emerged.
“COVID brought along the opportunity to re-evaluate,” says JLR vice-president René Lambert, particularly since it freed up office space in the city as workers abandoned the office to work from home. “We had more options than we did pre-COVID in terms of what we wanted to do to meet our growing needs for our staff.”René Lambert, VP, J.L. Richards & Associates Limited
No longer was building on their own property the best option. That meant it was time to go look for new office space to rent and sell the valuable asset that was their Ottawa home.
The challenge in selling for René and his team was understanding the process. “Our biggest need was probably just assurance of the process. Because of our location, we knew that it would eventually sell, but the question was: How’s it all going to come together? And we have a proactive board that really wanted to know how this was going to work.”
That’s where Koble, and partners Marc Morin and Graeme Webster, excelled. “They laid out a game plan in the beginning, which we bought into and thought, ‘OK, we understand why,’” René says, adding with a chuckle, “Marc was patient because he had to explain it to us a few times.”
The other challenge was figuring out exactly what JLR had on its hands and what the site could best be used for — despite a myriad of obstacles. It wasn’t zoned for the use with the highest return — high-rise residential. Therefore, in a normal market, the highest value for the site would be for office buildings, but that segment collapsed during the pandemic. An industrial use would be another option, but city services running through the middle of the property, as well as zoning restrictions, made that difficult.
“We were just limited, every time we turned around,” says Marc. “As monumental as this site was, it was a real puzzle to figure out how to position it.”
The Koble team created a process with René and JLR to overcome those challenges, taking a property that appeared to have limitations affecting its value and spending the time to thoroughly assess what its true options could be, defining a better purpose than, say, office buildings (for which there was no market) or industrial (for which development was restricted).
“The goal was to maximize the return for our client without artificially inflating the value for the buyer,” Marc says. “We needed to find this property’s ideal use and therefore ideal value.”— Marc Morin, Koble Partner & Co-Founder, Broker of Record
It took about six months and began with a detailed assessment of the property, bringing in third-party consultants and carefully determining the best use of the site to maximize the return for the client by focusing on the most suitable prospective buyers — companies that could utilize the property for their own operating business.
Then, rather than taking the property to market, Koble quietly reached out to selected people to gauge interest and validate both the value and the strategy. The approach emphasized one-on-one conversations with investors, treating both sides with tremendous respect, something Koble feels strongly about.
“Because this is such a unique property, we felt that if we exposed it to an open market and we didn’t find the right buyer immediately, then a property like this could sit on the market and get stigmatized,” Marc says. “We’ve seen that scenario play out many times and much more regularly since the beginning of the pandemic.”
René admits that his team was “a little surprised" at how much success the Koble team had in terms of actually drumming up interest by just calling people in their network. That was an interesting experience.
Internally, the Koble team spent weeks analyzing the market, recent sales and connecting with the most active investors, consultants, developers and other brokerages to develop a list of prospective parties that would see the incredible value that this site had to offer. As a leader in the development and construction industry themselves, the JLR team also leveraged their network of clients and colleagues and worked with Koble to refine that list.
In the end, multiple parties pursued the opportunity. Koble concluded a deal with an excellent buyer who is very active and growing in Ottawa and across the country, with a successful operating business, and who are planning an exciting new development on site.
“We’d be lying if we said that’s how we thought it was going to end up. We thought we’d go to market like you normally would. Koble’s strategy actually made the process easier. It worked out really well.”— René Lambert, VP, J.L. Richards & Associates Limited
He also points out that Marc did a good job of managing expectations and making the process a smooth one. “The end result was great, but I think it was as stress-free as it could be as well, it’s not just the end result.”