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When Needing Less Gets You More

Ron Scholder tells about how knowledge of the recycling industry helped smooth out a down-to-the-wire deal.

Cloud Recycling is a company based in Milwaukee, Wisconsin. They specialize in recycling appliances in an environmentally conscious manner. A major appliance retailer had heard about the company and were hoping to secure the company as a vendor. For this reason, Cloud Recycling was looking to expand with a location in the Twin Cities.

I had done business with Carlos Figueroa, the company’s Chief Operating Officer, a few years back. I told Carlos that I’d be happy to represent him in the market and would immediately start searching for sites that were available.

Searching For A Site
The search for the right industrial space proved to be quite difficult. An appliance recycling company was going to need quite a large space – not only to store the surrendered appliances, but lots of trailer parking for both appliances coming in and appliances headed out.

After a rigorous search of the area, I found two possible contenders. One of the properties, 2500 CR West, fit the geographic requirements perfectly. It was a warehouse located in Roseville with loads of both interior and exterior space.

I presented both properties to Carlos and -although he liked both- he kept coming back to the site in Roseville. “It was perfect,” says Carlos. “Not only did it have tons of trailer parking, but also it was close to 35W making it highly accessible.”

The Clock Was Ticking
Timing started to become an issue because of 3 things:

  1. There was another party interested in the Roseville space, and they were quite far along in the real estate process. They were already drawing up architectural plans, doing layouts for offices, etc. They were only a few weeks away from signing a contract and scooping up the property for themselves.
  2. The large retailer that would utilize the recycling center needed thirty days to cancel their contract with their previous vendor. They had scheduled a trip out to the Milwaukee plant in order to see how the Cloud Recycling model works.
  3. All this and the decision maker for the lessor was out of town on vacation!

Experience Is Key
Carlos was worried about securing the Roseville space before the other company did. Carlos set up a deadline where he would have to go back to retailer with the news that the deal had not gone through.

I knew that a recycling center was not going to need many bells and whistles, but rather a simple, functional space with multiple docks and parking. In that sense, we had an advantage: our use of the property did not require many leasehold improvements.

Leasehold Improvements are a negotiated part of a lease whereby the tenant representative tries to have the landlord pay for as much of the leasehold costs as possible. Because a recycling center doesn’t require a lot of offices or interior decoration, we could be more cost effective and more nimble on timing. For this reason, I was confident that we had the better offer.

Signing the Deal
The deadline was fast approaching. I emailed and called the listing agent to try to get an answer back as quickly as possible. Carlos was doing business with the lessor’s company and reached out to him directly as well.

Our persistence paid off. The lessor reviewed our offer and agreed that the lower level of leasehold improvements was a more attractive offer and the deal could turnaround faster. We were given approval on our Letter of Intent and a lease was drawn up.

Looking Ahead
Cloud Recycling secured the space at 2500 CR West and the deal with the major retailer. The business is up and running and the warehouse is full. Construction started in August 2019 and is expected to be completed around December 2019.

“We’re really excited to be in the Twin Cities,” says Carlos. “We love the new space and we’re excited to do business here.”

Conclusion
Working with an industrial property is about understanding and maximizing the right amount of size and space, ceiling heights, dock heights and trailer parking. And because it’s more function driven rather than aesthetic, you can often work more efficiently and on a tighter timeframe than one could in securing an office complex. When a deal gets down to the wire (as they often do) this sort of flexibility can work in your favor.

If you are interested in finding an industrial property for your business, reach out and let’s talk!

Ron Scholder, SIOR
612.924.6425 | RScholder@Ackerberg.com


 

Author

Danielle Gamble
Posted October 23, 2019

When you judge another, you do not define them, you define yourself.

Wayne Dyer