When the real estate market crashed in the late 2000s, a myriad of large companies approached their exiting landlords with the goal of lowering their rental rates. “Blend and extend” became a common theme in the real estate world: companies trading longer lease terms for lower rent in the short run. However, not all large companies rushed into a “blend and extend” situation. Some were patient, seeking quality buildings that could be purchased at significant discounts for their own use. Companies with strong balance sheets used their financial clout to acquire buildings at massive discounts, positioning themselves for reduced operating costs for years to come. Two notable local examples include Cable One and Mutual of Omaha Bank.
Cable One purchased 210 E. Earl, a vacant 158,000 square-foot office building with an adjacent parking garage for the paltry sum of $12.3 million. They bought the building at less than 50 percent of what it would cost to replace it today. Moving less than two miles from a leased facility, Mutual of Omaha Bank purchased a 73,337 square-foot building at 4950 S. 48th St. for $11.3 million. The building is less than five years old, was fully built out and ready for occupancy, and traded at significantly lower than replacement costs. Companies with strong balance sheets and long term space needs should continue to look for advantages in the market, and buying a building at the right time can provide that advantage.