PNC PLAZA
Landlord Representation Case Study
155 E Broad Street, Columbus, OH 43215
Situation
In the early 2000s, a Chicago-based investor purchased PNC Plaza, a landmark building at 155 E Broad Street in downtown-Columbus with 24 floors and 360,000 square feet of office space. At the time of purchase, the market was at an all-time high, the property was rent stabilized, and PNC and Deloitte LLP were anchor tenants. But as the market fell, vacancy skyrocketed throughout downtown. When Deloitte LLP moved out in 2010, the property was only 50% occupied.
Challenge #1
When NAI Ohio Equities took over in 2010, the property was a stale listing and had little interest from potential tenants. Through extensive research and diligent marketing, they reenergized the listing and increased showings. However, the team quickly realized that the current lease rates were not competitive.
Solution
Because the property was bought at a market high, the monthly debt service needed to be lowered in order to reduce lease rates. The landlord hired a mortgage specialist to negotiate with the bank. NAI worked closely with the specialist to provide the necessary market information to convince the bank to accept a reduced property value for buyout. After a successful negotiation, the landlord was able to reduce monthly lease rates by approximately 20%. Now that rates were in line with the market, NAI was able to close new deals and start improving the occupancy.
Challenge #2
After the first few years of activity, the floors left were outdated and unattractive to prospective tenants. Many of these spaces had been occupied for decades prior to being vacant and showed poorly. There were too many interior walls, making the spaces look darker and smaller than they really were.
Solution
NAI helped the client bring in a contractor to remove walls and open up the remaining floors. This made the spaces more attractive to potential tenants and easier to lease. The team continued their proactive outreach and follow-up to bring in the right tenants for these spaces.
Final Results
In the first five years of leasing PNC Plaza, NAI Ohio Equities executed ten new leases and three expansions, totaling over 90,000 square feet. These leases included a new anchor tenant, OhioHealth, who leased over 35,000 square feet and multiple floors. By the end of 2015, the building was 75% occupied and rent stabilized. NAI’s creative solutions and marketing strategies enabled the property to reach an average absorption rate of 8-10% per year, compared to the downtown market average of 0-2%.
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The team was continuing to fill the remaining vacancies when the landlord was approached by a potential buyer. This buyer was interested in converting the building to a mixed-use property, including either a boutique hotel or residential space, and so was able to offer a price that allowed the landlord to exit the property profitably. After negotiations and evaluations of the building, the property was sold in 2016.