We were challenged with leasing 150,000 square feet in New Orleans’ iconic Pan American Life Center. The ultimate goal was to prepare our 28-story, 680,000 square foot, Class-A office building for sale. But on the heels of Hurricane Katrina, half the city’s population had left the area, many businesses followed, and the office market was shrinking. Since the city was roughly six feet under sea level, corporations were reluctant to relocate to North Louisiana. In other words, we had to lease 150,000 square feet in a market with no tenants.
When a regional law firm sought to relocate its 70,000 square-foot offices, we jumped at the opportunity. The firm’s partners were excited about our building but would not relocate until they sold their 100,000 square-foot office building. After Katrina, they had to sell a building in a market with no buyers.
So, we bought the law firm’s building—but not quite. We took control of the asset under a purchase contract with termination rights; it required the law firm to sign our lease if we purchased their property. And while we were in escrow, the firm could not sign a lease at another building. In effect, we controlled the most significant deal the city was to see in years.
We then assembled a team to hunt for a buyer. Two months later, we flipped the law firm’s building at break-even and received a signed 70,000 square-foot lease. Closing the deal also raised leasing interest for our property. Within two years, we stabilized at over 90% occupancy and marketed the building for sale.
Little did we know that a national recession, multi-million-dollar plumbing issue, loan maturity, and panic over allegedly contaminated drinking water would complicate the sale. Despite the obstacles, we navigated a successful sale in a transaction the Wall Street Journal credited as the “Deal of the Week.”
