By Jim Moody, CAE
CSA President
You may have heard that CSA is building a new office building. I’ve gotten some questions about this from a few people, so I thought I would bring everyone into the loop on what’s happening. After all, as a member of CSA, you are an owner of the building.
When the current office space in Smyrna was leased several years ago, during a time when CSA had no president (chief staff officer), the elected officers of CSA negotiated a long term lease with an escape clause. There was a desire back then to own a building, but without stable staff leadership, it was not seen as a viable option at the time. The escape clause allowed the lease to be broken on Aug. 31, 2009. Otherwise, it would continue for three more years.
In December of 2007, the Board directed me to find a permanent location that we would own in time to execute the escape clause. With the help of three Board members relatively close to Atlanta (Bill Lummus, of Lummus Supply in Atlanta; Tom Hall of Blake Builder’s Supply in Griffin; and Chuck Bankston of Bankston Lumber in Barnesville), we engaged a commercial broker to help us choose a location.
During the first half of 2008, we developed criteria for where we wanted to be – south side of Atlanta, with easy access to major highways and budget-friendly hotels, far enough outside of the city that traffic would not be a major factor, and placed so that staff who commuted to the office daily would not be driven from the job by a shift in commuting patterns. We settled on the southwest side of Atlanta, generally in the I-85 corridor south of Fulton County but north of Newnan.
We ended up in Tyrone, which is in Fayette County. This is a growing area (or at least was growing in normal economic times) where property is appreciating nicely. It’s a stone’s throw from Peachtree City (often rated as one of America’s best places to live) but without the restrictive covenants and higher taxes.
We looked at existing office space, hoping for a good deal as the economy soured. We did find some buildings that would have worked, but the deals were not as sweet as we had hoped. That, coupled with our need for a large conference room which would have necessitated major demolition and renovation in any existing structure, pushed us to look at building. We found a nice little office park that offered build-to-suit lots available for purchase at what we perceived as a bargain price. One big advantage of an office park is open parking. We’ll need 25-30 parking spaces for meetings, but that won’t happen more than once a month or so. On a daily basis, we only need five spots. We won’t have to pave a lot to accommodate our rare need for extra spaces.
The building is about 4,200 square feet. CSA will take about 3,000 of it, with the rest designed for a tenant. Much of the CSA space is devoted to a nice conference room that will hold 25 people comfortably and an adjacent kitchen for serving that crowd. We envision all of our Board meetings and seminars being held here. Not only will be in control of the environment, but it will allow us to be even more budget-conscious in pricing our programs for you.
Obviously the market for tenants is different today than it was when we started this, but the payback on the tenant space is only about five years at current market rates. While we will aggressively seek a tenant now, if we are not immediately successful, it will not mean financial catastrophe for us. Much of the tenant space on the market in our area is unfinished. We are finishing our space, which we believe will give us a competitive advantage for a tenant who needs to move in quickly. Access to our nice conference room may also help us attract someone.
CSA had the financial reserves to pay cash for the land and the building. We did, in fact, pay cash for the land. But, we chose to finance the building rather than sell some of our investments at the low point of the market. There is no penalty for pre-paying our loan from our own proceeds, and we may well do so quickly if the market continues to rise as it has for the past three months.
At one point, just before we closed on the land in December of 2008, the Board took another hard look at whether we wanted to do this. Back in 2007 when we made a commitment to own a building, we could see that the economy was not going to be as robust as it had been for the past few years. I don’t think any of us, however, foresaw just how bad things would get. Still, at the end of 2008, the Board chose to proceed. If we did not pull the trigger then, it would be several more years before our lease expired. Our finances continued to be strong, and we had the opportunity to take advantage of building in a down market. We realized just how good of a deal we got when our lender had the building and land appraised at 30% higher than the purchase price. (I’m not going to bet the farm on that equity – it’s an unrealistic number. But there’s little doubt that we got a good deal on our purchase.)
So, the bottom line is that we’ll be moving into the new digs around the middle of August. Once we get settled, we’ll have an open house for any member who wants to come. Of course, we always welcome members to drop by. As I said before, you are an owner.
Decorating is not my strength (you’d have real questions about me if I said it was), but we do need some stuff to make it feel like home. If you have any memorabilia from the industry or from your business that you’d like to part with, we’d love to have it. I know some of you have pictures, old ads, signs, etc. Many of those have sentimental value and you’d never let them go. I’m just looking for the extras – the things taking up space that you can’t bear to throw away but have no real use for anymore. If you’ve got something you think could work on our walls or in the hallways, let me know. (Jimmy Barnes at Buettner Bros. in Cullman, AL: I know you have an attic full of advertising benches, but don’t feel obligated.) I’m also in the market for some genuine faux wood blinds, if any of you with home centers would be willing to make a deal.
Several of our members have donated material or provided material at substantial discount. Our contract with the builder ensures that CSA (not the builder) benefits from the savings. We likely will have more contributions before it’s all over. When we’re done, I will recognize all of our donors in this column, and we’ll also have permanent recognition in the office.
CSA President
You may have heard that CSA is building a new office building. I’ve gotten some questions about this from a few people, so I thought I would bring everyone into the loop on what’s happening. After all, as a member of CSA, you are an owner of the building.
When the current office space in Smyrna was leased several years ago, during a time when CSA had no president (chief staff officer), the elected officers of CSA negotiated a long term lease with an escape clause. There was a desire back then to own a building, but without stable staff leadership, it was not seen as a viable option at the time. The escape clause allowed the lease to be broken on Aug. 31, 2009. Otherwise, it would continue for three more years.
In December of 2007, the Board directed me to find a permanent location that we would own in time to execute the escape clause. With the help of three Board members relatively close to Atlanta (Bill Lummus, of Lummus Supply in Atlanta; Tom Hall of Blake Builder’s Supply in Griffin; and Chuck Bankston of Bankston Lumber in Barnesville), we engaged a commercial broker to help us choose a location.
During the first half of 2008, we developed criteria for where we wanted to be – south side of Atlanta, with easy access to major highways and budget-friendly hotels, far enough outside of the city that traffic would not be a major factor, and placed so that staff who commuted to the office daily would not be driven from the job by a shift in commuting patterns. We settled on the southwest side of Atlanta, generally in the I-85 corridor south of Fulton County but north of Newnan.
We ended up in Tyrone, which is in Fayette County. This is a growing area (or at least was growing in normal economic times) where property is appreciating nicely. It’s a stone’s throw from Peachtree City (often rated as one of America’s best places to live) but without the restrictive covenants and higher taxes.
We looked at existing office space, hoping for a good deal as the economy soured. We did find some buildings that would have worked, but the deals were not as sweet as we had hoped. That, coupled with our need for a large conference room which would have necessitated major demolition and renovation in any existing structure, pushed us to look at building. We found a nice little office park that offered build-to-suit lots available for purchase at what we perceived as a bargain price. One big advantage of an office park is open parking. We’ll need 25-30 parking spaces for meetings, but that won’t happen more than once a month or so. On a daily basis, we only need five spots. We won’t have to pave a lot to accommodate our rare need for extra spaces.
The building is about 4,200 square feet. CSA will take about 3,000 of it, with the rest designed for a tenant. Much of the CSA space is devoted to a nice conference room that will hold 25 people comfortably and an adjacent kitchen for serving that crowd. We envision all of our Board meetings and seminars being held here. Not only will be in control of the environment, but it will allow us to be even more budget-conscious in pricing our programs for you.
Obviously the market for tenants is different today than it was when we started this, but the payback on the tenant space is only about five years at current market rates. While we will aggressively seek a tenant now, if we are not immediately successful, it will not mean financial catastrophe for us. Much of the tenant space on the market in our area is unfinished. We are finishing our space, which we believe will give us a competitive advantage for a tenant who needs to move in quickly. Access to our nice conference room may also help us attract someone.
CSA had the financial reserves to pay cash for the land and the building. We did, in fact, pay cash for the land. But, we chose to finance the building rather than sell some of our investments at the low point of the market. There is no penalty for pre-paying our loan from our own proceeds, and we may well do so quickly if the market continues to rise as it has for the past three months.
At one point, just before we closed on the land in December of 2008, the Board took another hard look at whether we wanted to do this. Back in 2007 when we made a commitment to own a building, we could see that the economy was not going to be as robust as it had been for the past few years. I don’t think any of us, however, foresaw just how bad things would get. Still, at the end of 2008, the Board chose to proceed. If we did not pull the trigger then, it would be several more years before our lease expired. Our finances continued to be strong, and we had the opportunity to take advantage of building in a down market. We realized just how good of a deal we got when our lender had the building and land appraised at 30% higher than the purchase price. (I’m not going to bet the farm on that equity – it’s an unrealistic number. But there’s little doubt that we got a good deal on our purchase.)
So, the bottom line is that we’ll be moving into the new digs around the middle of August. Once we get settled, we’ll have an open house for any member who wants to come. Of course, we always welcome members to drop by. As I said before, you are an owner.
Decorating is not my strength (you’d have real questions about me if I said it was), but we do need some stuff to make it feel like home. If you have any memorabilia from the industry or from your business that you’d like to part with, we’d love to have it. I know some of you have pictures, old ads, signs, etc. Many of those have sentimental value and you’d never let them go. I’m just looking for the extras – the things taking up space that you can’t bear to throw away but have no real use for anymore. If you’ve got something you think could work on our walls or in the hallways, let me know. (Jimmy Barnes at Buettner Bros. in Cullman, AL: I know you have an attic full of advertising benches, but don’t feel obligated.) I’m also in the market for some genuine faux wood blinds, if any of you with home centers would be willing to make a deal.
Several of our members have donated material or provided material at substantial discount. Our contract with the builder ensures that CSA (not the builder) benefits from the savings. We likely will have more contributions before it’s all over. When we’re done, I will recognize all of our donors in this column, and we’ll also have permanent recognition in the office.
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