It was the Fall of 2016 and the real estate market was just reawakening from what had been a debacle in market valuation. Our prospective client was the heir of a long-time property owner in the South Florida submarket of Hialeah. Located at 4660 Palm Ave, the “Dolphin Bar Building” had been a staple in the central neighborhood for the better part of 25+ years. The client, not wanting to play the role of landlord, made the decision to sell the property with plans to reinvest the proceeds elsewhere.
Having been retained as the Seller’s representative, we completed an income approach to valuation analysis and determined that the maximum projected sales price would less than what our client needed to provide a reasonable profit after accounting for capital gains taxes and expenses.
Because 4660 Palm Avenue was centrally located in a very high traffic corridor with favorable frontage, and given its age, we determined that it would make sense to market the property as a redevelopment site, rather than an income producing opportunity. A developer / investor could certainly step in and convert the commercial property to a higher and better use, however the obstacle remained that the lot size was quite small at approximately +/-5,600 SF, thereby making it difficult to build enough income producing square footage to make it a lucrative investment.
If the lot size of 4660 Palm Avenue were only larger, then it would increase its economic attractiveness to prospective developers looking to convert the site into its highest and best use. The solution became clear, we contacted the adjacent property owners and explained that by combining their properties with 4660 Palm Avenue, and offering them together as a land assemblage, they could in essence realize a higher projected sales price. Although not all neighbors were interested in selling, the ownership at 4690 Palm Avenue, a two-story mixed-use office/retail building, certainly understood the possibilities.
By combining 4660 thru 4690 Palm Avenue, we were able to package approximately a half-acre land assemblage with +/- 9,500 SF of existing improvements in a central high traffic frontage. Although developer / investors were our intended prospects, the ultimate buyer was an owner-user who was excited about the potential of repositioning the buildings to accommodate his business, while also having the ability lease out the balance of space to tenants that will help subsidizes the properties operating expenses.
The combined land assemblage sold in October 2018 for twenty-three (23%) percent greater than had each property been sold separately.