Does your company have surplus assets that are liabilities on the balance sheet? Surplus assets are properties that are no longer in use, with no immediate plans to put them into service. Often, corporate environmental and legal departments are hesitant to divest these properties because they are under a regulatory program and have not achieved closure, and regulatory closure is not anticipated for decades.

Are you ready to turn those liabilities into assets?

I spent over 25 years in environmental remediation before changing careers and coming to National Land Realty. During that time, I helped many developers navigate the Brownfield process in North Carolina and South Carolina. Many of these properties now include residential components. With a vision, the proper consulting engineers, and an experienced commercial real estate agent, most any property can be redeveloped into something beautiful, exciting, and profitable.

Here are a few things to consider:

1. Reuse – do you want your competition to start up in the building you constructed specifically for that purpose? You could be giving your competition an advantage. And if the building was constructed for a specific purpose, can it realistically be retrofitted to fit another purpose?
2. Demand – many property owners assume they can lease surplus properties as warehouse space. This is not necessarily the case. Is there a demand for warehouse space in the area? Are the location and road access suitable for warehousing? Is there a higher use for the land?
3. O&M – operation and maintenance for empty buildings can be very expensive. Basic maintenance of the roof and exterior are necessary, and in most cases, security is paramount. Looters can strip a building of most of its value in a few weeks and vagrants can set up camp. Reserves set for asset retirement obligations are more than just O&M. Potential legal costs associated with trespassing incidents cannot be estimated.
4. Property taxes – taxes must be paid regardless of occupancy. If the building is empty, it’s not generating revenue to offset the property taxes. If the building has been vacant for 12 months, it’s probably going to remain vacant unless something radical is done.
5. Demolition – unusable portions of the building should be razed to make it more marketable. If the cost of demolition of the entire above-ground structure (leaving the foundation and below grade utilities in place) is less than five years of property tax, consider partial or total demolition. A developer can see his vision better on a blank canvas. Remember, your company’s vision has already been realized and put to rest, and it’s time for someone else’s vision to rise in its place.
6. Environmental concerns – use your state Brownfield program to make this happen. With help, a developer can incorporate engineering control so environmental impacts won’t impact occupants. Through new construction with proper vapor barriers or parking garages, the building itself becomes permanent cap. Add on deed restrictions, and the potential exposure pathways are incomplete. Redevelopment can actually reduce your environmental costs. Just remember the new developer will be responsible for the added costs, and the purchase price is normally discounted to reflect this.

There’s no time like the present to be thinking about how your company will turn surplus properties into real assets. Talk to us about a marketing plan for your surplus assets.