Property Overview
The property is located at 175 E Main Street Lexington KY 40507 within a primary urban corridor. A six story 55,000 square foot urban office building in Lexington’s Center Business Zone, an art deco design from the 1940s, it was configured as a mixed use building with ground level retail and offices on the above floors and features a 52 space subgrade parking garage.
Client Background
Experienced partnership searching for a trophy investment in a central business district.
Market Context
Covid era economy ravaged the downtown office and hospitality demand, halted construction and left a questionable future for urban retail. However, the economic downturn provided for favoriable acquisition prices producing record low price per square foot opportunity.
Project
- Converting an office building into a mixed use property with 23 residential short term rental units; managing the construction progress
- Procuring office user tenant for vacant office space
- Ongoing property management; lease administration, maintenance management and reporting and stabilize the property for long term investment returns
Challenges Encountered
- 78% vacancy
- Substantial economic uncertainty
- Low demand for office user
- Construction cost overruns, Covid economy, inflation, material delays, labor shortages
- Inspections delays by local government
- Construction change orders, plan revisions and design complication with a
- Significant deferred maintenance with elevators, HVAC, fire alarm and general maintenance
Conclusion
Despite the substantial economic uncertainty and major challenges associated with large scale renovations of old buildings, we generated major wins by procuring two office tenant, one being a 7,000 long term office lease. And while the 23 unit construction project experienced setback and challenges, the principal’s expansive network of professionals, good reputation and commitment to excellence “got the job done” by tenacity, hard work and sheer determination. The property continues to perform and enjoys the city’s status as the only high-rise short-term rental property.
