BACKGROUND
This was an outstanding 302,668 square foot facility on 50 acres. At the time it entered the market, it was only nine years old. It was fully air-conditioned, high-ceiling space with high-quality construction and an exceptional appearance.
The population of Aiken is only approximately 28,000, however, it enjoys a high quality of life more comparable to a much larger community. Located off I-20, it sits across the Savannah River from Augusta, Georgia. The building itself is in the Sage Mill Industrial Park, which is upscale, with other modern, attractive facilities.
Notwithstanding all of the selling points, the property had been listed with our major competitor for 3-1/2 years prior to Hart Corporation’s appointment as the listing agent.
PRICING
The project was handled day to day by Bob Blackman, of Hart’s corporate office, and Tommy Turner and Don Moss, of Hart’s Carolinas/Virginia regional office. The first step was to address the pricing. The original asking price was $10,900,000, then lowered just slightly to $9,900,000. While this was an exceptional facility, the price was scaring away logical buyers. Therefore, the seller approved Hart’s recommendation, of a much more realistic asking price - $7,900,000 or $26.10 per square foot. This was still high enough to obtain top dollar, if the ideal buyer existed, but not so high as to scare away potential, general market buyers, who would have to make the normal compromises. Although SKF USA wanted the best dollar possible, they understood the necessity to be in line with the market, especially in the midst of a deep recession.
MARKETING
At the onset of the project, Bob, Tommy and Don commenced Hart’s normal marketing steps, including canvassing of companies in and around Aiken, coordinating with the local and state development organizations, and contacting of national and international companies. This created activity and developed prospects.
One of the other advantages of using Hart Corporation is that they typically have listed the better available properties in a region. If a prospect is investigating one of Hart’s listings and determines that it is not exactly right for them, possibly another may be.
Along these lines, the ultimate purchaser, MTU Detroit Diesel, had brought their purchasing manager onto their site selection team. The firm was leasing a portion of a building in Detroit, but their plan was to locate a green-field site near Richmond, Virginia, on which to construct a 200,000 square foot facility on a campus-type setting, with the ability to expand over ten years to 580,000 square feet. However, in view of the economy, their new directive was to look for an existing site in Virginia or the Carolinas.
One option was the Bosch plants on the market in Sumter, South Carolina, which MTU Detroit Diesel therefore studied in detail. They could work, but the initial retrofit cost was in the $2,500,000 range.
MTU’s purchasing manager had previously received information on the SKF building in Aiken, South Carolina. While in Sumter, he contacted Hart for further information and the pricing. This then led to an inspection tour of the Aiken facility.
The immediate impression of Aiken was that it had “headquarters location” written all over it. That the location was in an industrial park just off the interstate was also a selling point. Hart then provided the CAD drawings to him to see if the layout would work for their operation.
Regarding Sumter, it was determined that an immediate addition would be required to accommodate the testing at the end of their line. However, this would mean purchasing adjacent ground.
OUTCOME
An engineering company was then engaged to review the costs involved in retrofitting both properties. Meetings were also held with the state and the communities to negotiate incentive packages. In the meantime, other alternative locations were presented in North Carolina, South Carolina, and Virginia. However, the firm decided to concentrate on the Sumter and Aiken locations.
The company’s initial review determined that state incentives would be the same, as both were Tier 3 communities. The community incentives were also very similar, as were the labor quality and wage levels.
The difference therefore came down to the real estate. Sumter comprised two adjacent buildings with limited expansion, requiring the purchase of additional ground. However, the overall acquisition cost would be less.
Aiken was a larger building with much better curb appeal, located just off the interstate. The acquisition cost for Aiken would be more expensive, but the upfit costs were projected to be less. The final decision therefore came down to total cost combined with the type of facility and location that MTU felt would best serve their future growth.
Part of the decision-making process was to determine if the company’s headquarters should be moved to South Carolina. It was felt that Sumter was not appropriate for this. However, the consensus was that Aiken could be.
Another plus for Aiken was that, as part of their manufacturing process, MTU Detroit Diesel required a central chip collection system, which was in place in Aiken.
Based on all the factors, the choice was made to proceed on Aiken. The next step was a negotiating session at MTU’s Detroit headquarters attended by representatives of SKF USA and Hart Corporation. It was followed by counter-proposals and new offers. The sale closed ten months after Hart’s appointment.
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