Client Success Story: Trading Taxes and Tenants for Passive Cash Flow

We are pleased to announce the sale of 439 20th Street, an 8,300 SF vacant warehouse in Greenwood Heights, Brooklyn. The M1-1 zoned property sold for $3,875,000, or $467/SF.

 

This Deal Presented Several Challenges

A (Literal) Bike Lane Obstacle

How hard is it to sell a warehouse when an adjacent bike lane blocks tractor-trailer access? Turns out, quite hard. You instantly lose a huge pool of buyers: anyone whose business depends on trucks coming in and out.

 

Sky-High Taxes

The owners had collected strong rent from a national NNN tenant for over 15 years. Consequently, the tax bill kept climbing. By the time we were hired, the tenant was leaving and taxes had reached $65,000/ year. That is about $8/SF, compared to the Brooklyn warehouse average of $4–5/SF. We knew this would be a tough pill for both investors and users to swallow.

 

Flexible Closing Hurdle

The seller’s goal was clear: trade out of a money-draining property and into a low-management, higher cash-flow NNN asset. But they didn’t want the pressure of a rigid 1031 timeline. Finding a buyer willing to offer a flexible closing wasn’t easy, as most users want immediate occupancy and their lenders prefer hard deadlines.

 

Here’s How We Took Action

Leveraged Past and Current Inventory

This year alone, we have sold over $12.5M of industrial and commercial property in Greenwood Heights and have another $8M on the market. This makes us the most active industrial broker in the area. This track record benefits our sellers because, historically, about 80% of Brooklyn warehouse deals are purchased by users, roughly 40% of whom are first-time buyers. For every listing, we build a “Top 10” list of first-time buyers and user-occupiers willing to pay a premium. The majority of our tours and offers come directly from this strategy.

 

Working with Fellow Brokers

We have built a reputation for incentivizing the buyer-broker community to bring us qualified buyers, something that is far from standard in the real estate industry. In this case, 5 tours and 2 offers came directly from our outreach to the buyside brokerage community.

 

Targeted Cold Calling and Door Knocking

We invested time and energy targeting service-based businesses that don’t rely on trucks (due to the previously mentioned bike lane obstacle). While we maintain a property email list of over 10,000 users and investors, in a world where inboxes are flooded, picking up the phone and getting face-to-face remains the most effective way to engage buyers. We are not afraid to pound the pavement!

 

Result

Our efforts generated 19 tours and 11 offers, and we ultimately awarded the deal to a local end-user. Through competitive bidding, they paid 15% above our average offer, waived environmental due diligence, and agreed to give the seller three 30-day extensions in the contract— providing the time needed to secure a 1031 exchange property.

 

With this flexibility, the seller was able to purchase a NNN property in Texas with a long-term lease backed by an S&P 500 company, nearly doubling their cash flow.

 

Testimonial

“Selling our family’s warehouse was a big responsibility, and Bobby didn’t take it lightly. He treated the property and our family’s legacy with care and gave the sales process everything he had. He was calm under pressure, always responsive, and most importantly, got us to a great outcome.” – The Karanthanasis & Ermogenous Families