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Marketing for a quick sale.

As lenders take more and more rental property back, preparing a property for successful disposition becomes an important skill for the real estate manager. A successful sale is even more difficult when the subject property is distressed. Low occupancy, an undesirable resident profile, or a negative perception in the marketplace can limit the number of potential buyers and reduce the sales price.

Basically, there are two approaches to preparing a property for quick sale:

* Do nothing and take your chances.

* Implement a short-term marketing and management program to positively reposition the property prior to sale.

If executed properly, the benefits of taking the second approach can translate into significant financial rewards.

A case in point

A major lender recently took possession of a downtown high-rise apartment building in Chicago, with the intention of selling the property as soon as possible. The lender's immediate goals were simple: clean up the management operation, increase cash flow, and improve the property's physical appearance.

Our company, Trammell Crow Residential Services--North, was selected as the management firm to spearhead the project. When the company took over the 230-unit property in May 1992, statistics were less than encouraging: physical occupancy was 81 percent, leased occupancy was 82 percent, and monthly rental income was $138,000. The property also had 28,000 feet of commercial space, none of which was occupied, and a 262-space garage.

Time was of the essence as the property had to be turned around quickly. We had six months to take an unknown building in Chicagoland with a dubious reputation and "put it on the map."

Our initial impression of the property was that it had a great deal of potential. It was relatively new (only 4 years old) and in an excellent location on a major intersection.

The property also had some drawbacks. There was virtually no marketing program. In addition, the empty windows of the commercial space that surrounded the building were a neighborhood eyesore. Finally, although the property was located in Chicago's famed "Gold Coast," it was also only two blocks from a Chicago Housing Authority project. The location was considered dubious by some of the upscale renters we hoped to attract.

Nevertheless, we were optimistic, and with the help of of R.C. Romine, Inc., a Chicago-based real estate communications firm, we developed an aggressive marketing plan. Our goals were to:

* Positively re-position the property.

* Create leasing momentum.

* Increase occupancy.

* Increase property value.

* Sell the asset.

However, to achieve these goals in six months required something more than just sound marketing. It needed something dramatic.

The Picasso building

One of the big Chicago events of summer 1992 was the commemoration of the 25th anniversary of the unveiling of the Picasso sculpture in the city's Daley Plaza. Working with the city's Department of Cultural Affairs, we arranged for the property to sponsor a mural project honoring the Picasso's anniversary. Once the mural was completed, it would be installed in the windows of the commercial space surrounding the building.

The property would then be able to capitalize on the publicity surrounding the Picasso celebration. Our goal was to make the property be known as "The Picasso Building."

The mural was painted by talented high school art students participating in the city's Gallery 37 project. The summer program provides art instruction for several hundred students, with funding from the government and from corporate sponsors.

Over an eight-week period, some 50 panels, four feet by eight feet, were painted. The mural project made national news. Tipper Gore, the wife of Democratic vice presidential candidate Albert Gore, visited the mural site and painted a portion of it.

Extending the impact

The event was continually promoted at the property. Collateral pieces were developed explaining the project and were handed out on-site to prospects and residents. The same piece was handed out on the site of Gallery 37, which was visited by hundreds of people each day.

The property's name started to appear in press articles, commemorative clothing was printed, and 1212 North LaSalle's name (as well as Trammell Crow's) was heralded by city officials at the official birthday party for the Picasso sculpture held in Daley Plaza.

An unveiling party for the students' work was held at the property and was attended by city dignitaries, industry leaders, and property residents. A video was shot documenting the event for use as a marketing tool.

As the mural became a reality, two benefits emerged. A number of kids who worked on the mural lived in CHA housing near the property. By supporting a work program for them, we used the property's proximity to this housing as a plus, touting our community involvement and support.

Secondly, because the building was now associated with the visual arts, it started to become known as the "in" place to live. A younger crowd, albeit still professional (average rents are approximately $800), started to seriously consider living at the "Picasso Building." Traffic increased dramatically. Leasing momentum had begun.

The bottom line

The results of this marketing program were astounding.
 May August
 1992 1992
Physical occupancy 81% 98%
Leased occupancy 82% 100%
Average rents $880 $800
Concessions 2 months None
Monthly income $138,000 $161,000

By September 1992, the closest you could get to renting an apartment was to be on a 60-day waiting list. By increasing gross revenue by about $30,000 per month, the value of the property would theoretically increase by $3.2 million (using a 9 percent cap rate).


In some cases a comprehensive, aggressive management plan alone is not enough to garner dramatic results in a short time period. A high profile, multifaceted marketing campaign is essential to make enough "noise" in the marketplace to create leasing momentum.

In addition, the results of this program will demonstrate to potential buyers that with the right marketing and management, the property can be fully occupied and profitable.

Gerry Wiatrowski is managing partner of R.C. Romine, Inc., a Chicago real estate communications firm. He is also a regular real estate columnist for the Chicago Sun-Times.

Fred Mitchell is a divisional manager for Trammell Crow Residential Services--North in Chicago. Trammell Crow is the nation's largest apartment management firm.
COPYRIGHT 1992 National Association of Realtors
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Wiatrowski, Gerry; Mitchell, Fred
Publication:Journal of Property Management
Date:Nov 1, 1992
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