Dear Investors and Partners,
Hopefully, you are enjoying the spring as we do. We recently flew to Merrillville again to meet with potential tenants and their brokers, manage rehab work, and review progress across the property. In this Merrillville Portfolio April update, we are covering recent leasing progress across the retail, flex, and office buildings, the HVAC and roofing work scheduled for May, and the next round of unit improvements that to help us continue pushing occupancy higher.
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Retail Building (29,771 RSF; occupancy: 84%)
Ivan bought this awesome t-shirt from one of our tenants.
In April, we leased a small unit, increasing occupancy by 3%. Construction is complete, and the tenant is expected to move in on May 1.
We are also signing two leases with other tenants: cat grooming and salon suites, totaling 1,882 SF. Once those leases are signed, the building’s occupancy will increase to 90%. Construction-wise, one unit should be ready by May 1, and the other should be ready by June 1.
The last two vacant units are also moving forward. One is being white-shelled, and the other is under construction. Both should also be ready for showings in June. Once we lease those two spaces, the building will be at 100% occupancy.
HVAC has been the biggest issue in this building. We have already repaired or replaced several units, and the remaining ones should be replaced in May. We have signed off on approximately $72,000 of HVAC work so far, and the total HVAC spending should be around $100,000. While this is higher than the budget, we believe we will be able to offset the increase with savings on roof work.
The roof still appears to have approximately 10 years of remaining useful life, so we are doing targeted repairs instead of a full replacement. This work is also already scheduled.
Flex Building (31,564 RSF; occupancy: 47%)
Our biggest tenant - Action Behavior Centers, occupying 12,000 square feet in the flex building - finally opened.
So happy to see the building coming to life.
The buildout is beautiful.
We have a prospective tenant who wants to take between 6,000 and 6,500 SF, and we were waiting for them to decide which part of the building they were interested in. That held up our remodeling and marketing efforts. Thanks to the broker representing them, who we were able to meet in person, we were finally able to identify the part of the building they want and start planning improvements for the remaining units.
We plan to convert one unit into a true flex space, with roughly 30% office, 70% warehouse, and a roll-up door. We also plan to split another unit, which is currently about 4,000 SF, into two roughly 2,000 SF spaces. For the shell unit, we will only install a roll-up door. We expect to start the work in mid-May.
The roof situation is similar to retail. We should be good for another 10 years with targeted repairs.
Office Building (18,358 RSF, including loft; occupancy: 43%)
We recovered a tenant we had thought was lost during DD, and they moved in, bringing occupancy from 33% to 43%.
Showings are happening and we are negotiating extensions and an expansion with two existing tenants.
Three units are being remodeled.
Three units are currently being remodeled. One of those units should be completed within the next couple of days, and the other two are expected to be completed within approximately two weeks.
The roof on this building is near the end of its useful life. We have scheduled the replacement and expect it to be done in May. This is within our budget.
We also plan to improve the curb appeal of the building in a cost-effective way by updating the landscaping, pressure washing the exterior, and addressing minor issues such as crumbling brick and damaged caps.
Invest with Us
That is it for the April update - please reply to this email if you want to learn more.
We also have two new projects in due diligence that we are excited about.
If we already have a relationship, please text Alex or Ivan if you would like to invest.
If we have not met in person yet, please reply to this email if you would like to learn more. We would be glad to meet you, walk you through what we are seeing, and share how we evaluate new opportunities.
Ivan & Alex
Principals, Columbia Creek Development, LLC
Co-Managers, Merrillville Portfolio, LLC