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3. Public Works Building Exclusive Commercial Listing CITY OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 1591 Park Road Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site www.ci.chanhassen.mn.us 3 MEMORANDUM TO: Todd Gerhardt, City Manager Laurie Hokkanen, Assistant City Managerfl.- FROM: DA TE: August 20, 2009 C)~. SUBJ: Consider Agreement for an Exclusive Commercial Listing, Existing Public Works Building BACKGROUND Staff began marketing the Public Works building for sale in January, 2009. The building will be available for occupancy by February, 2010. The asking price is $2.19 million. Please see the attached brochure that staff developed for marketing the building. Staff has received a number of inquiries on the building, and given 5-6 tours. However, a buyer is not currently in place. The sale of the Public Works Building will achieve several goals. 1. Return the parcel to the tax rolls. Total property taxes estimated at $75,000 per year (including County, School District, etc.) 2. Relieve the City of maintenance and utility expense. 3. Provide funding for Fire Station #3. In June, staff solicited proposals from area commercial brokers. A copy of the RFP is attached.We received proposals from: 1. Summerhill Commercial Real Estate 2. Northmarq 3. Welsh Co. 4. CB Richard Ellis 5. Marathon Real Estate Staff evaluated the proposals and found all proposers to be well qualified in terms of experience, local knowledge, and references. Therefore, staff evaluated the financial aspects of the proposals. The two most competetive bids were from Summerhill Commercial Real Estate and Marathon Real Estate. Marathon proposes the most favorable terms, with a 3%/4.75% commission. A copy of the Marathon proposal is attached. RECCOMENDA TION Staff would recommend entering into a month-to-month contract with Marathon Real Estate at the August 10, 2009 meeting. C:\Documents and Settings\laurieh\My Documents\Selection of Commercial Broker for PW Building.doc Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow Request for Proposals Commercial Broker Services City of Chanhassen 7700 Market Boulevard, P.O. Box 147 Chanhassen, MN 55317 June 2009 1 CALENDAR OF EVENTS Date June 4, 2009 June 10, 2009, 10 am June 30, 2009, 4 pm July 13, 2009 Event RFP Published Optional Building Tour Deadline for Proposals Firm Selection OVERVIEW The City of Chanhassen is seeking to enter into a commercial exclusive listing agreement sale agreement for the sale of the 1591 Park Rd, known as the Chanhassen Public Works building. The City has provided a marketing brochure, attached, that describes the building. The City expects to vacate the building by February , 2010. The asking price is $2,190,000. There is no expressed or implied obligation for the City to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. CONTRACT TERMS The bidder shall specify the required contract terms, including the following items: . Length of contract . Brokerage fee (set value or percentage of sale price) o Broker should be prepared to split fee with buyers broker, if any . Commitment to list property on MLS . Any other requirements of the broker ADDITIONAL INFORMATION The bidder should also provide the following information: . List of three most recent sales comparable to the property in question . List of three references (previous sellers preferred) . Description of familiarity with Chanhassen market . Description of customer service philosophy - ie, how inquiries will be handled, planned marketing materials, etc. PRE-PROPOSAL BUILDING TOUR An optional pre-proposal building tour has been scheduled for June 10, 2009 at 10 am. Interested parties should RSVP to Laurie Hokkanen at lhokkanen@ci.chanhassen.mn.us and meet on site at 10 am. 2 PROPOSAL EV ALVA TION AND SELECTION CRITERIA The contract will be awarded to the fmnlbroker that best meet(s) the needs ofthe City. In evaluating the proposals, the following criteria will be used: . Financial impact of contract . Responses of client references . Demonstrated knowledge of the City, the community, and its market conditions . Interviews, if requested The City reserves the right to award the contract in whole or in part. The City also reserves the right to reject proposals, in whole or in part, that do not comply with the provisions of this RFP. Costs of brokerage services, although a significant factor, may not be a dominant factor. During the evaluation process, the City reserves the right, where it serves their best interest, to request additional information or clarifications from proposers or to allow corrections of errors or omissions. PROPOSAL SUBMISSION Proposers are required to send two (2) copies of the proposal to the City on or before 4 p.rn. on June 30, 2009. Alternately, the proposer may submit one physical copy and one electronic copy, to lhokkanen@ci.chanhassen.mn.us. Proposals are to be sent to: Laurie Hokkanen, Assistant City Manager City of Chanhassen 7700 Market Boulevard P.O. Box 147 Chanhassen, MN 55317 For questions or clarifaction on this request for proposals, please contact Laurie Hokkanen at (952) 227-1118 or lhokkanen@ci.chanhassen.mn.us. 3 Marathon Real Estate Proposal to Sell 1591 Park Road Length of Contract: Month to Month Brokerage Fee: 4.75% If a co-broker is used 3% If buyer is sourced internally If the City sells the property on their own any marketing costs would be reimbursed. Marketing Plan: Place facility on the Commercial Listing Services Local/National Send monthly Email property brochures to 700+ Brokers in the metro area. Source area businesses in person or by phone to make them aware of the building availability Create a four color brochure for market needs Complete a revised Pricing Analysis Provide Bi-Weekly activity reports Other Considerations: The City may continue to market the property via their sign should that be a desire. References/Comparables: 5330 Cedar Lake Parkway, St Louis Park, MN Barbara Dean 612-508-6451 25,000+ sq ft Sold 1201 South 5th Street Hopkins Mark Senn 612-839-1077 20,000 sq ft Sold (multiple sales) SouthWest Transit Bus Garage Norex Drive, Chaska, MN Len Simich 952-934-3101 100,000 sq ft Purchase 1340 Oakside Circle Chanhassen, MN 55317 Telephone 612-210-8410 E-mail cjp@mchsi.com Marathon Real Estate Area Knowledge: . I have lived and worked in the Southwest metro for 28+ years. In addition I have served on various committees, councils and non-profit organizations throughout that time frame. My real estate business has focused solely on this area. Resume available upon request. Company Philosophy: Marathon Real Estate is a boutique real estate firm that focuses on the southwest metro area. I am the sole employee of the company and to that end I set and deliver the tone of the organization. In succinct terms, that tone is to deliver personalized service that the large firms simply cannot provide. My years in corporate America, the government sector and the non-profit world gives me experience and knowledge that very few people can match. I really enjoy what I do and part of that is because I have one overriding company policy "only do business with people you know" I have turned away business because of this but in the long run I'm happier, my clients are happier and can implicitly trust my actions. Re~~ ~ Craig Peterson Marathon Real Estate 1340 Oakside Circle Chanhassen, MN 55317 Telephone 612-210-8410 E-mail cjp@mchsi.com SUMMERHILL Commercial Real Estate, LLC June 30,2009 Laurie Hokkanen, Assistant City Manager City of Chanhassen 7700 Market Boulevard P.O. Box 147 Chanhassen, MN 55317 RE: Commercial Broker Services Proposal Chanhassen Public Works Building 1591 Park Road Chanhassen, MN 55317 Dear Laurie, Thank you for the opportunity to submit this Commercial Broker Services proposal to discuss listing the City of Chanhassen's Public Works property for sale at 1591 Park Road, Chanhassen, MN 55317. Enclosed is a Listing Agreement draft for review. We would be very interested to work on this assignment, and we are excited about the prospect of marketing the property for sale. Following are the general terms and conditions of this Commercial Broker Services proposal and Listing Agreement: LENGTH OF CONTRACT: The term of the Listing Agreement is proposed to be for approximately nine (9) months through April 30, 2010, then month to month thereafter. BROKERAGE FEE: The commission structure for a sale is to be based on 2.75% of the sale price of the property with provision for a total commission of 5.25% in the event an outside cooperating broker other than Summerhill Commercial Real Estate, LLC (Broker) procures a. deal. In the case of an outside cooperating broker being involved in the transaction, the outside broker's share of the fee will be 2.75% and Summerhill's will be 2.5%. ASKING PRICE: $2,190,000. MLS MARKETING: Summerhill will be responsible for listing the property for sale through the Minnesota Commercial Association of REALTORS@ Exchange, CoStar Group@, LoopNe~ (full access), Northstar MLS@, and the Summerhill Com.mercial Real Estate, LLC website (www.summerhillcommercial.com). 1458 White Oak Drive, Suite 106, Chaska, MN 55318 tele: 952.556.5151 fax: 1.866.466.2280 cell: 952.221.7580 peterk@summerhillcommercial.com www.summerhillcommercial.com SUMMERHILL Commercial Real Estate, LLC THREE (3) MOST RECENT SALE COMPS: 1. Chanhassen Park Place, 7801 Park Drive, Chanhassen, MN 55317. 24,777 square foot multi-tenant industrial office/warehouse building. The building is 13'-14' clear, hgas docks, drives, and was built in 1988. The previous owners of the building were clients of Broker (Chanhassen Park Place Partners, or Jim & Dan Hendrickson). Previously, Summerhill had successfully leased out one (1) space in the building in 2007. On October 23, 2008, the Sellers were approached by Broker with a potential Buyer Broker was representing at the time. The Sellers communicated that they did not need to sell, but were willing to for the right price. The building was 80% occupied at the time. We entered into serious negotiations and finally came to terms in late November, 2008, ultimately closing on the property December 30, 2008. Summerhill represented the Buyer and Seller in this transaction. The property ultimately sold for $1,450,000, or approximately $58.52 psf, or at approximately a 7% capitalization rate at 80% occupied. 2. Susan Realty Co., 6401-6441 Goodrich Avenue, St. Louis Park, MN 55426. 45,192 square foot multi-tenant industrial office/warehouse building. The building is 13'-14' clear, hgas docks, drives, and was built in 1964. The building had been owned by the Sellers for about forty (40) years, and they were about to lose a 37,500 square foot tenant, leaving just 7,500 square feet occupied, therefore, they decided to sell. The building, which was about to become 17% occupied/83% vacant, was originally listed for $2,075,000 on March 24, 2008 and was put under contract on April 24, 2008, the . building ultimately successfully sold for $1,875,000, or $41.49 psf. Summerhill represented the Seller and the Buyer in the transaction. A unique feature of this transaction was the pre-sale inspection process with the City of St. Louis Park. Summerhill was in charge of getting through this very involved pre-sale inspection process in. order to successfully close on the property on August 1, 2008 (Seller wanted to sell at the end of the large 37,500 sf Tenant's lease); Summerhill continued to represent the Buyer in the leasing at the building, which became 100% occupied April 2009. 3. Lewis Street Partners, 112-114 2nd Street West, Chaska, MN 55318. This 4,725 sf historic, mixed-use building in downtown Chaska, MN was listed for $350,000 in February 2008 and sold in August 2008 for $315,000, or $66.67 psf. 112-114 2nd Street West is a two (2) story building with very nice professional office finishes on the main and lower levels, with two (2) spacious and occupied two (2) bedroom apartments on the. upper level and was built around 1900. Summerhill represented the Seller in this transaction. The Buyer, Sugar Creek Chiropractic, was sourced after they had received the double two (2) sided brochure via mail (sample enclosed), and upon receiving all the building information, excitedly called their residential real estate agent. They had been looking for a while. The Seller's business entity, Melchert, Hubert, Sjodin PLLP, was able to stay on in the lower level for three (3) years while the Buyer, Sugar Creek Chiropractic, occupied the main level, creating a win, win, win resolution. 1458 White Oak Drive, Suite 106, Chaska, MN 55318 tele: 952.556.5151 fax: 1.866.466.2280 cell: 952.221.7580 peterk@summerhillcommercial.com www.summerhillcommercial.com SUMMERHILL Commercial Real Estate, LLC THREE (3) REFERENCES: The three (3) following references correspond to the sale transactions above: 1 . Primary Contact: Jim L. Hendrickson Hendrickson Brothers Drywall Office: 952.470.1249 Cell: 952.237.2352 Fax: 952.470.4461 E-mail: hendricksonbros@gmail.com Secondary Contact: Dan L. Hendrickson Hendrickson Brothers Drywall Office: 952.470.1249 Cell: 952.237.2356 Fax: 952.470.4461 2. Primary Contact: Mike Salloway Robstebry Management 139 Westwood Drive North Golden Valley, MN 55422 Office: 952.926.5454 Fax: 952.926.5757 Secondary Contact: Steve Newman Newman Family LP 650 US Bank Plaza 200 South Sixth Street, Suite 650 Minneapolis, MN 55402 Office: 612.339.1348 Fax: 952.339.1248 E-mail: snewman431@comcast.net 3. Primary Contact: Brad Solheim Melchert, Hubert Sjodin, PLLP 121 West Main Street, Suite 200 Waconia, MN 55387 Office: 952.442.7700 BWSolheim@mhslaw.com Secondary Contact: Keith Sjodin Melchert, Hubert, Sjodin, PLLP 121 West Main Street, Suite 200 Waconia, MN 55387 Office: 952.442.7700 kesjodin@mhslaw.com CITY OF CHANHASSEN MARKET FAMILIARITY: Peter A. Kordonowy has been active in the Chanhassen commercial real estate market since 1996, primarily in industrial office/warehouse and office/showroom/flex, starting in 1996 with Steiner Development, Inc. and has been with Summerhill Commercial Real Estate, LLC since early 2006. As a result, he is very familiar with the Chanhassen commercial real estate market. Since 1996, Peter was directly involved with the completion of the following twenty (21) lease, sale, or development transactions in Chanhassen, MN: Arboretum Bus. Park I, 8085-8175 Century Blvd, (101,600 sf, 1997), development deal. Northern lights Laser, Inc., 8151 Century Blvd, (12,800 sf, 1998), direct deal. Iris of Excelsior Ltd., 8175 Century Blvd, (12,036 sf, 1998), direct deal. Arboretum Bus. Park II, 7920-8030 Century Blvd, (115,520 sf, 2000), development deal. Ultronics, Inc., 1582 Lake Drive W, (4,200 sf, 2001), co-operating broker deal. 1458 White Oak Drive, Suite 106, Chaska, MN 55318 tele: 952.556.5151 fax: 1.866.466.2280 cell: 952.221.7580 peterk@summerhillcommercial.com www.summerhillcommercial.com SUMMERHILL Commercial Real Estate, LLC Cordem Corp/Mustang LLC, 7860 Park Dr, (23,000 sf, 2001), co-operating broker deal. Infinity Precision, 7850 Park Drive, (9,000 sf, 2002), co~operating broker deal. Arboretum Bus. Pork III, 2885-2945 Water Tower PI, (59,990 sf, 2003), development deal. Vengra Design/Smart Exhibits, 2932 Water Tower PI, land sale and new building development (20,000 square feet, 2004), direct deal. Classic Gymnastics, Inc., 2885 Water Tower Place, (26,404 sf, 2004), direct deal. Contact initially made by direct door to door prospecting by Peter at their previous location on Fuller Road in Eden Prairie, MN in marketing efforts for the land at Highways 5 & 41 in Chanhassen. Interlaken Technology, Inc., 8175 Century Blvd, (12,036 sf, 2003). Pro-Tech Test Solutions, 1709 Lake Drive W, (5,725 sf, 2003), co-operating broker deal. Dry Cleaning Station, 7968 Century Blvd, (5,546,2004), co-operating broker deal. Cardiocom, Inc., 7980 Century Blvd, (25,398 sf, 2005), co-operating broker deal. Tracy Ronhovde d/b/a The Donee Whse, 7954 Century Blvd, (4,311,2005), direct deal. Valutec, Inc., 7962 Century Boulevard, (6,015 sf, 2006), co-operating broker deal. Uni-Select USA, 7801 Park Drive, (4,121 sf, 2007), co-operating broker deal. Heartland America, 8085 Century Blvd, (31,200 sf addition, 2007), development deal. Mediacom MN, LLC, 1670 Lake Drive W, (8,235 sf, 2008), co-operating broker deal. Chanhassen Pork Place Sole, 7801 Park Drive, (24,777 sf, 2008), direct deal. Multi-tenant office/warehouse. WanTcom, Inc., 1420 Lake Drive W, (5,200 sf, 2009), co-operating broker deal. In addition, Peter was involved with at least twelve (12) other leasing, construction, or sale transactions in Chanhassen, MN since 1996, including the Lifetime Fitness club and corporate headquarters. Peter introduced the land at the corner of Highway 5 and 41 in Chanhassen to Joe Leonard of Lifetime Fitness after reading a Business Journal (City Business) article about Lifetime's land search at the time, sending him information, and making follow up contact via phone. Initially, they were cool to the location, but soon, their interest increased. The deal was eventually completed by others at Steiner Development, Inc. due to different areas of responsibility, with the deal originally being sourced by Peter's marketing efforts. Also, on a related note, Summerhill has identified a space in Chanhassen for its own office and is planning to move its office from Chaska to Chanhassen on October 1, 2009. We are very excited about this move, and look forwarding to having our offices in Chanhassen effective October 1, 2009. In addition, Peter was a Chanhassen resident from 1996 to 2002 before moving to Carver, MN. Also, Peter is a small minority owner of one (1) commercial property in Chanhassen. 1458 White Oak Drive, Suite 106, Chaska, MN 55318 tele: 952.556.5151 fax: 1.866.466.2280 cell: 952.221.7580 peterk@summerhillcommercial.com www.summerhil!commercial.eom SUMMERHILL Commercial Real Estate, LLC CUSTOMER SERVICE: "Knowledge combined with ability and perseverance to serve our clients interests." This philosophy has worked well over the past thirteen (13) years for Peter and his clients. Peter believes in consistent communication and follow up with his clients, as well as attention to detail. Peter works harder and more thoroughly for his clients than is typically found in the industry. Peter takes a customized and adaptable approach to each marketing assignment, never losing site of the ultimate goal of successfully concluding an assignment in a timely and acceptable manner. All inquiries into the property will be tracked, recorded, and reported on a monthly basis. Inquiries are responded to in a timely and courteous manner. Active prospects for the property are communicated in the written monthly marketing report as well in addition to regular and frequent phone and e-mail communications. Summerhill will be responsible for the creation of all marketing pieces and other marketing materials such as. e-mail blasts. Samples of standard marketing materials are enclosed including (brochure, tri-fold mailing brochure, and postcard mailing). Summerhill will help coordinate any proposed and recommended additional advertising in trade journals, newspapers, and periodicals. In order to grow its business as well as more effectively serve its existing clients, Summerhill hired Theodore R. Kordonowy (Ted) as an Associate on March 3, 2009 . Ted is a recent graduate from the University of Minnesota. The Associate position provides support in the areas of Administration, Construction, Marketing, Property Management, and Sales &. Leasing. Ted is Peter's younger brother by thirteen (13) years. MARKETING BUDGET: Summerhill proposes an initial marketing budget at Summerhill's expense of approximately $1,000. This will be adequate to cover the expense of sending a mass mailing campaign. in the form of either 2,500 5.5" x 8.5" postcard mailers, or 1,000 envelope/tri-fold brochures (up to two (2) double sided color brochures per envelope). This initial mailing campaign will be submitted to the printer/mailer by August 31, 2009 or sooner. The estimated cost of $1,000 is a turnkey number and includes design, mailing list acquisition and assembly, printing, stuffing (in the case of tri-fold brochures which would have two (2) double sided tri-fold brochures to each envelope) and postage (standard mail for postcard, 1 st class for envelopes/tri-folds). Both the postcard mailers and tri-fold brochures are printed on high quality, glossy material (samples enclosed). MARKETING PLAN: . Sign the Listing Agreement. . Revisit the site to take photographs and create an updated as-built floor plan for the building as required (no cost for the floor plan if necessary to be done). 1458 White Oak Drive, Suite 106, Chaska, MN 55318 tele: 952.556.5151 fax: 1.866.466.2280 cell: 952.221.7580 peterk@summerhillcommercial.com www.summerhillcommerciaLcom SUMMERHILL Commercial Real Estate, LLC . Prepare marketing piece by July 29, 2009, including an updated as-built plan as required. . Erect up to two (2) "For Sale" signs on the Property by July 29, 2009 in a mutually agreed to manner. . List property Minnesota Commercial Association of REALTORS@ Exchange, CoStar Group@, LoopNet<B> (full access), Northstar MLS@, and the Summerhill Commercial Real Estate, LLC website (www.summerhillcommercial.com) by July 29,2009. . Broadcast e-mail marketing information on property to brokerage community by August 7, 2009 (approximately 650 brokers). Ongoing every 4-6 weeks thereafter. . CCIM.com Mail Bridge national broadcast e-mails to CCIM.com members (9,000 member designees, 9,000 people pursuing the designation nationwide) by August 14, 2009. . Postcard or brochure mailing campaign submitted to printer/mailer by August 31, 2009 (see above). . Propose and coordinate newspaper, trade journals, and periodicals advertising to begin in September 2009. Propose budget of up to $1,000.00 to be carried by Seller. Nothing will be done or authorized without Seller's advance written consent and approval. This is a voluntary item to be based on future research of potential effectiveness. . Follow up call on all mailings. . Cold call prospects. . Use company and personal networks and company database to introduce prospective clients to space. . Prepare client monthly report at first month's end for active prospects. Thank you for this opportunity. We would very much look forward to working with the City of Chanhassen on this assignment. We are available to meet and further discuss any details of the above or the enclosed Listing Agreement. Should you have any questions in regard to any of the content of this proposal or other documentation, please give me a call at 952.556.5151. Sincerely, Summerhill Commercial Real Estate, LLC Sincerely, Summerhill Commercial Real Estate, LLC *)~ ~ 2. ;1~ Peter A. Kordonowy - CCIM Broker Theodore R. Kordonowy "Ted" Associate 1458 White Oak Drive, Suite 106, Chaska, MN 55318 tele: 952.556.5151 fax: 1.866.466.2280 cell: 952.221.7580 peterk@summerhillcommercial.com www.summerhillcommercial.com