Dogged Determination Leads to Unusual Lease Deal
Although commercial real estate is a people business, brokers should not disregard Earth's other inhabitants when looking for lessees. In the case of Terence P. Coyne, CCIM, the perfect tenant turned out to be man's best friend.
Coyne's interest in the commercial real estate industry was piqued by his father's parking management company, which he eventually sold but kept ownership of the real estate. “Since there is only one good job in the parking business, and my dad had it, I asked my dad what job would teach me the [commercial real estate] business. He advised me to become a broker,” Coyne says. He worked for a Chicago real estate company for a few years and then relocated to Cleveland, his hometown, where he is now a senior vice president at Grubb & Ellis.
Through the years Coyne has been involved in many diverse and interesting real estate transactions. However, he never dreamed that one of his most memorable deals literally would be for the dogs.
Barking Up the Wrong Tree
The Berry Pipe Co., one of Coyne's longtime clients, owned a 7,700-square-foot manufacturing building on Cleveland's near east side, a predominantly residential area. Coyne had represented the Berry family in the acquisition of the property, “a former United Parcel Service facility, which had been purchased by a recycling company and very poorly maintained,” he says.
The Berry family extensively renovated the building and won several awards for rehabilitation and landscaping from a local development corporation. After three years the company outgrew the property and hired Coyne to sell it near the end of 2000.
However, the building's awkward layout and location bordering an elevated railroad presented selling obstacles, as did Cleveland's adverse market conditions at the time. “It became obvious that I had to look beyond traditional users for this space to make something happen,” Coyne says.
He conducted “the usual marketing — a sign, fliers, LoopNet, open houses,” which drew many interested parties, including an auto body dealership, a laundermat, and other small-space users. Unfortunately, they all wanted to lease the property, but the Berry Pipe Co. “wanted to cash out [of the property] and invest their dollars elsewhere,” Coyne says.
One of Coyne's mailers attracted a day-care operator who proposed renovating the property into a day-care facility. The company originally wanted to lease as well, but eventually signed a contract to buy the building for $215,000. Yet problems began to litter the path, and the day-care operator ultimately was unable to obtain proper financing.
“The Berry Pipe Co. and I were quite disheartened as we watched my perfect deal fall through, and I again was stuck with selling a manufacturing building that no manufacturer wanted,” Coyne says.
Working Like a Dog
For the next 18 months, Coyne extensively marketed the property to no avail. Cleveland's economy was “in full downturn and showed no signs of recovery in the near future,” he says. “Time after time, prospective clients said that they would like to lease the space but were not willing to buy it.”
The overwhelming interest in leasing the property gave Coyne an idea. He approached the Berry Pipe Co. with an offer to buy the building for the same terms as the day-care operator's contract. He enlisted a local redeveloper who specialized in repositioning properties as his partner.
“It was obvious that there was a future for this building, but it was only a matter of time before we would find out what that future would be,” Coyne says. He embarked on another ambitious marketing campaign, but this time he positioned the building as a “for-lease” property.
Collaring a Lessee
Coyne primarily marketed the property as a day-care facility due to its location in a growing residential neighborhood, “but no one could have envisioned where this property would end up,” he says. A local entrepreneur came to Coyne with a “revolutionary” idea: a dog day-care center.
“I received this call and initially thought it was a joke,” he says. But “she made me aware of the fact that children are not the only ones around the house who need a place to stay during the day while mom and dad are away at work,” he says. However, Coyne and his partner were extremely skeptical about the idea and were reluctant to strike a lease deal.
Also, the prospective lessee “had no experience with the dog day-care business and had no money,” he says. No such facility existed in Cleveland at the time, so the market was completely untested and its viability unknown. And Coyne hates dogs. “Can't stand them,” he says. “My grandmother … always told me, ‘Dogs are farm animals: leave 'em outside.'”
Still, the idea intrigued Coyne. “I am always rooting for the underdog,” he says. He and his partner eventually agreed to lease to the dog day-care center because “the market was very weak, and we were open to any use for the building,” he says. Since there were no comparable properties, he developed lease terms based on what he was planning to charge an industrial user. “We received our [rental terms], but [they were] still less than the dog day-care owner had budgeted,” he says. “It was truly a win-win situation.”
The dog day-care owner extensively renovated the facility, adding a fenced-in outdoor playground equipped with wading pools and play toys. The indoor manufacturing space is now two indoor play areas and an office. “The building stands out from its urban industrial, residential, and retail neighbors as it now features murals of dogs and colorful dog bones painted on the interior and exterior walls,” Coyne says. The facility is named Cleveland MetroBark, a spoof on the Cleveland MetroPark system.
MetroBark averages 40 dogs per day and employs two workers in addition to the owner. “If all goes well, she has hopes of purchasing the property sometime during the lease,” Coyne says.
A Dog's Life
Although not the biggest money-making transaction, Coyne thoroughly enjoyed this project. “I helped redevelop a building, which I think helps bring life to a neighborhood and is good for the soul,” he says. He takes his two little girls to MetroBark and explains how he helped bring the building back to life. He also enjoys telling others about the project. “People laugh and then want to know more,” he says. “I feel like I assisted in the development of a small business, which is now experiencing a great deal of success,” he adds.
The MetroBark transaction always reminds Coyne to return all calls. “I returned [this call] only because I was desperate, but I almost threw the message away. You never know what potential deal is on the other end of the phone,” he says.
Surprisingly, Coyne's dislike for dogs hasn't changed. “But I love [these] dogs,” he says.