This particular client specialized in medical devices and was relocating from Canada to Houston. Initially, the plan was to purchase an existing industrial facility in north Houston close to Beltway 8. After 3 months of searching and touring dozens of properties, the ownership group decided to shift the strategy and pursue a design-build option.
Once the decision was made to construct a new facility Black Label was able to locate the land, negotiate the price, and perform all due diligence within 60 days. During this 60-day due diligence period, Black Label coordinated with the company’s local representative to design a facility that would accommodate all of their needs as well as fit their budget and the property. Pricing became an issue during this process and U.S. based lenders were hesitant to provide favorable debt terms to a newly established entity and to owners that weren’t U.S. citizens. At this point, the owners of the company began looking at existing facilities again as the target date to be operational was coming up in 11 months. The decision was made to lease a temporary facility in Houston to take delivery of newly ordered machinery on time. Black Label was able to locate a building that would meet there needs in the short term and get them entered into a 12-month lease.
During this short-term lease, planning and permitting continued on the build to suit the facility. Prior to construction commencement, the company’s owners decided they did not want to sink capital into real estate. Their only options were to negotiate a long-term lease for the building they were in or find another building that worked better. By this time the owners of the company had spent approximately $700,000.00 on land, plans, and permits. This was a considerable amount of money that would be difficult to recoup in a short amount of time. So, rather than start over, Black Label proposed a lease back option that would allow construction of the new facility to proceed. The deal would require an investor/developer to come in and purchase the property from the company while at the same time the company would execute a long-term lease with the investor/developer. Black Label began presenting the property/project to Houston area investors and developers and negotiated several deals until we found one that worked for all parties involved. Within 30 days, Black Label had a contract, and lease in place and construction proceeded. Construction was scheduled to take 8 months but the contractor was able to complete the project within 6 months. Two weeks after completion of the building the short-term lease expired and the company was able to move directly into the new building.
If you are looking to relocate your company to Houston or simply need a new facility, please contact Black Label Commercial Group today to see how we can help.