2018 CBG Deal of The Year Winner
Key Commercial Real Estate began working with Madison College in 2013 to help them make strategic real estate decisions regarding their downtown campus. The site located at 211 N Carroll Street had been an educational facility for over 100 years. However, as the Truax Campus developed over the decades, the downtown campus slowly become more obsolete. By 2013, the college needed to make some difficult choices regarding whether to invest significant funds to repair the aging facility, or to determine an alternate use for the site.
Along with Key Commercial, the College embarked on a comprehensive analysis of renovation costs versus alternative uses for the site. This included complex valuations of the site under multiple use scenarios, interviews with downtown stakeholders, discussions with developers, contractors and architects, and multiple meetings with the City. Ultimately, the College decided that the building and location no longer served the best needs for their students and faculty and that the building would be sold. This concept went in front of the Board of Directors for the College in 2015 but was not granted approval. For the next twelve months, Key Commercial worked with the college to tailor a new proposal for the Board to consider involving the concept of a long-term ground lease for the site. This included many consultations with the State Technical College Board as well as an opinion required by the Department of Justice as a tech school had not previously tried to enact such a transaction. This approach was eventually approved by the Board of Directors and Key Commercial created a Request for Qualifications followed by a Request for Proposal that were distributed locally and nationally.
After a receiving ten responses to the initial RFQ, the list of respondents was narrowed down to the top five. Key Commercial worked with the College to develop an elaborate scoring system for the responses to help direct and substantiate the decision-making process. Ultimately, a proposal by Drury Hotel was selected by the College and approved by the Board of Directors and State Technical College Board. This led to a lengthy lease negotiation for a ground lease with a 50 year initial term, options up to 98 years and an initial term lease value in excess of $50 million. Finally, in 2018 the lease was signed and all contingencies were removed.
Madison College will be vacating the downtown Campus in summer 2019 with construction starting by Drury immediately thereafter. Drury Hotels will be renovating the existing building along with constructing an addition to create a large-scale urban hotel on the site scheduled to open in fall of 2021.