5130 Wilson Blvd Proposal

NOVEMBER 17, 2020 SITE 5130 WILSON BLVD

VALUATION & BROKERAGE 8th St N N Frederick St
SERVICES PROPOSAL
5130 WILSON BLVD N Emerson St Wilson Blvd
ARLINGTON, VA 22205

PREPARED BY:

MARC TASKER, CCIM, SIOR
[email protected]
703.268.2735

JACK REGLER
[email protected]
703. 268. 2740
JENNY STAINES
[email protected]
703.259.7050

TABLE OF CONTENTS I. AERIALS
II. PROPERTY INFO, STRENGTHS

& CHALLENGES

III. PROPERTY MANAGEMENT
IV. LEASE UP OF VACANT SPACES
V. SALE OF PROPERTY
VI. MARKETING PLAN & BROKERAGE

RESPONSIBILITIES

VII. USER OR REDEVELOPMENT

TIMELINE

VIII. KLNBFEES
IX. CONCLUSIONS &

RECOMMENDATIONS

ABOUT KLNB

WHO IS KLNB PARTNER OWNED, COLLABORATIVE APPROACH

KLNB is a leading provider of commercial real estate services 117 EMPLOYEES RETAIL FOUNDED IN
throughout the mid-Atlantic region. An independently owned 89 BROKERS OFFICE
and operated commercial brokerage and real estate firm, 41 PRINCIPALS INDUSTRIAL 1968BALTIMORE IN
KLNB provides a variety of services. LAND
DATA CENTER
Founded in 1968, KLNB currently has over 85 full-time GOVERNMENT SERVICES
brokerage professionals strategically located throughout the
Washington, D.C. / Baltimore region. AN OFFICE IN EVERY
MAJOR MARKET
With KLNB you get the presence and power of a global firm
offering a high-touch, hands-on approach to commercial real TYSONS, VA
estate services. We serve our clients with a level of personal
care and market expertise that benefits them in every
transaction.

TENANT REPRESENTATION WASHINGTON DC TOWSON, MD
LANDLORD REPRESENTATION COLUMBIA, MD
COMMERCIAL INVESTMENT SALES BY THE $1.7 B 1,000OVER
REAL ESTATE PROPERTY MANAGEMENT NUMBERS 10.4 MILLION
SERVICES ASSET MANAGEMENT 2019 TRANSACTION VOLUME TRANSACTIONS
FACILITIES MANAGEMENT SF LEASED
FINANCING
FINANCIAL ANALYSIS 8 MILLION
RESEARCH
MARKETING & BRANDING SF UNDER MANAGEMENT

IN HOUSE MARKETING STATE OF THE ART TECHNOLOGY
AND DESIGN AND INDUSTRY DATABASES

MEET YOUR TEAM

MARC TASKER, CCIM, SIOR JACK REGLER JENNY STAINES

PRINCIPAL SENIOR DIRECTOR OFFICE SPECIALIST

FLEX/INDUSTRIAL, LEASING/SALES OFFICE SALES & LEASING

MAYELA LOPEZ SCOTT SAM MILWIT ERICA HERBERT

DIRECTOR OF MARKETING GRAPHIC DESIGNER EXECUTIVE ASSISTANT

NAI KLNB is a leading provider of commercial real estate services throughout the mid-Atlantic region. An independently owned and operated commercial brokerage and real estate
services firm, NAI KLNB provides a variety of services including tenant and landlord representation, leasing, consulting, investment sales, property management and financing.
Founded in 1968, NAI KLNB currently has 83 full-time brokerage professionals strategically located throughout the Washington, D.C. / Baltimore region.

With NAI KLNB you get the presence and power of a global firm offering a high-touch, hands-on approach to commercial real estate services. We serve our clients with a level of personal
care and market expertise that benefits them in every transaction.

I CLOSE - UP AERIAL

SITE

I MARKET AERIAL

495

TYSONS ROSSLYN WASHINGTON
CORNER
695
66
RONALD REAGAN
SEVEN 5130 WILSON BOULEVARD WASHINGVTIROGNINDI.AC.INTERNATIONAL AIRPORT
CORNERS
50

395

ARLINGTON

BAILEY’S

II PROPERTY STRENGTHS & CHALLENGES

5130 WILSON BLVD, ARLINGTON, VA - FEDLOCK BUILDING

Total Gross Building Area (GBA): 21,596 SF

Net Rentable Area: 19,546 SF

Total Land Area: 49,574 SF (1.14 Acres)

Zoning: C-O-1.0

Parking Spaces: 47 (Surface)

Year Built: 1985

Current Use: Office/Flex

Current # of Tenants: 4

STRENGTHS

• Ideal building size for a small “USER” Buyer.
• Virtually no inventory of buildings of this size currently on the market for sale.
• Located in a very desirable Arlington location, surrounded by high-end residential

homes. High likelihood of a local business owner in the neighborhood as a
potential purchaser.
• Opportunity for signage / branding facing Wilson Blvd.
• 47 surface parking spaces available - good parking ratio for Arlington County
(2.18 per thousand)
• Building is already multi-tenanted, so opportunity for a USER to lease out excess
space to 3rd party Tenants.
• Interest rates are still at historically low levels with attractive financing, including
SBA loans for Owner occupant buildings.
• METRO Bus stop directly in front of the building for great access to public
transportation.

CHALLENGES

• Our team cannot think of many “challenges” with the Property. The
biggest hurdle in our opinion would be getting the 2 Owners on the same
page on what an acceptable transaction would be in terms of economics
and a timeline for closing.

III PROPERTY MANAGEMENT

Meaningful Relationships

KLNB’s successful reputation is based on hard work, market knowledge and client relationships.
We serve leading corporate, institutional and private clients throughout the Mid-Atlantic regions
including:

High-Touch, Hands-On

With KLNB Management you get the presence and power of a global firm offering a high-
touch, hands-on approach to commercial real estate services. We serve our clients with
a level of personal care and market expertise that separates us from the competition.

7.8M 105 1,500 Our ReachHAGERSTOWN WESTMINSTER BEL AIR Portfolio Breakdown...

SQUARE FEET OWNERS TENANTS FREDERICK LOCH RAVEN Aberdeen NEWARK
MANAGED SERVED SERVED RESERVOIR Proving Ground
1 40
6 TOWSON
TEAM 30% RETAIL
OFFICES BALTIMORE
13
Washington, DC COLUMBIA GLEN BURNIE
Annapolis, MD 28% OFFICE
Baltimore, MD BWI
Columbia, MD AIRPORT DOVER
Fairfax, VA
30 10 Tysons, VA LEESBURG GAITHERSBURG 20% INDUSTRIAL

WASHINGTON D.C. ANNAPOLIS

WASHINGTON DULLES
INTERNATIONAL AIRPORT

PROPERTY ENGINEERING MANASSAS ALEXANDRIA 12% COMMERCIAL CONDO
MANAGEMENT PROFESSIONALS ASSOCIATIONS
PROFESSIONALS 17 50
CHESAPEAKE 50
BAY
13

10% FLEX

2018: KLNB’s Year in Review Sample Properties

$1.66 BILLION 954 #16 PROPERTY MANAGEMENT RETAIL OFFICE INDUSTRIAL
COMPANIES
IN LEASING VALUE CREATED FOR LEASING & SALE #8 COMMERCIAL PROPERTY
OUR CLIENTS TRANSACTIONS MANAGERS

10 MILLION $1 BILLION
SQUARE FEET LEASED FINANCED

ClockTower Place Twin Knolls Office Center 451 Defense Highway
Annapolis, MD Columbia, MD Annapolis, MD

III PROPERTY MANAGEMENT

Services Provided Our Team

We provide the following services to our Property Management, Construction The KLNB Property Management platform began as a joint venture with The Loughlin
Management, Facilities Management and Condominium Management clients. Management Group, which was founded in 1991. In conjunction with KLNB, we have grown
to manage over 160 properties totaling approximately 8 million square feet throughout
the Mid-Atlantic region.

Budgeting Lease Administration David Loughlin Carl Truitt Mike Neu
We maintain an electronic database of all leases to President Executive Vice President Vice President
$ KLNB Management develops and implements accurately bill and collect payments from tenants for
comprehensive annual operating and capital budgets to rent, operating expenses, insurance and taxes. [email protected] [email protected] [email protected]
ensure all expenses are within budget. 410-280-1808 410-897-2853
Tenant Relations 410-280-1145
Reporting Regularly interacting with tenants and maintaining a Carl has over 30 years of experience in Mike has over 20 years of experience in
We provide comprehensive, accurate and timely financial database of tenant calls allows us to respond proactively. David has over 35 years of experience commercial and residential property commercial real estate. He specializes
reporting accompanied by an executive summary by We make sure tenants are happy and want to renew. managing commercial real estate. He management. He joined the company in the management of retail shopping
utilizing our property management or owner software. formed the property management in 2004 after having been the Regional centers.
Service Contractors division of KLNB in 2008 and the Director of Boxer Properties in the
Engineering We hire and closely supervise contractors for landscaping, company has grown steadily. Together Houston and Baltimore markets. One
Our team will prepare a detailed maintenance plan, snow removal, security, etc. We utilize a competitive with the The Loughlin Management of the highlights of his career was
develop an operating manual, maintain a database of bidding process. Our buying power and contractor Group, they now manage over 160 converting a failing mall in Texas into a
all service calls and have on-site engineering personnel. relations reduce operating costs and maintain quality properties totaling well over 7 million successful Mercado Mall.
We properly maintain equipment to reduce operating service. square feet of space.
costs.
Property Insurance
Curb Appeal We provide a package insurance policy with $20M
We regularly inspect common areas and vacant spaces umbrella. This reduces costs to owners and tenants.
to make sure our first impression is a great impression.
Receivership
Property Taxes KLNB Management can act as a receiver.
KLNB advises owners of increases in the tax bill and if
appropriate, appeals property tax assessments allowing Commercial Condo Association Management
for reduced costs to owners and tenants. We conduct board meetings, collect condo fees, maintain
common areas, etc.
Leasing
We work directly with leasing professionals to fill
vacancies and renew leases while providing a single
point of contact to the owner.

In order to better serve you, 36 375 6,000 1.5B $20B Nicole Myers John Ginnever Stan Meros
KLNB Management is affiliated Director of Engineering Director of Business Development
with NAI Global, the single Vice President, Sr. Property Manager,
largest, most powerful global RPA, CPM, CCIM [email protected] [email protected]
network of owner-operated [email protected] 443-949-3647 443-632-6059
commercial real estate 443-949-3777
brokerage firms in the world. John has 15 years of experience and Stan has more the 40 years of
Nicole has more than 20 years of oversees the in-house Building Services experience in facilities and property
experience in the Washington DC office Department. He is a licensed HVAC management at the executive level.
market. Prior to joining KLNB she was technician and is active in The Building Prior to joining KLNB Management as
the Director of Property Management Owners and Managers Association Director of Business Development, he
for First Potomac Realty Trust and prior (BOMA), the downtown Partnership was the Sr. VP of Property Management
to that she was the Vice President of and the Greater Baltimore Committee. for St. John Properties.
Property Management Services for
COUNTRIES GLOBAL OFFICES PROFESSIONALS SQUARE FEET MANAGED TRANSACTION VOLUME Vornado/Charles E. Smith.

IV LEASE UP OF VACANT SPACES

THERE ARE 4 EXISTING TENANTS IN THE BUILDING:

• Federal Lock & Safe, Inc………………...........6,143 rsf – LEX 9/30/29
• Phoenix Fitness, LLC ………………................6,237 rsf - LEX 4/30/21
• Ignite Baseball, LLC……………………............3,900 rsf - LEX 11/1/24
• Built Environment Engineers, PLLC…....... 3,195 rsf - LEX 5/31/21

As of November 13, 2020, Phoenix Fitness (“PF”) and Built Environment Engineers (“BEE”) have not given indication if they plan to renew their leases when they
expire in 2021. Should they decide not to renew the lease and vacate their respective spaces when the leases expire, here are our projected re-lease assumptions:

• PF: The ground level office / retail space is much more leasable space then the lower level. Leasing conditions for office, and especially retail have been very soft
since March 2020 due to the Covid-19 pandemic. We expect leasing demand for new space to be soft through at least mid-2021.

- Market Rent: $22.00 - $25.00 NNN (under $30.00 psf full Service)
- Lease Term: 5 – 7 years
- Annual Escalations: 2.5% - 2.75%
- Tenant Improvements: $20.00 - $40.00 psf ($124,740 - $250,000)
- Rent Abatement: 5 – 7 months
- Vacancy Period: Likely minimum of 6 months, but 12 months or more is very realistic.

• BEE: This is general office space, and due to Covid-19, leasing conditions will remain soft thru most of 2021 as more and more companies will embrace telework
models. A lot of office users have already placed their space on the market for sublease, and this space will compete with a tremendous amount of available office
space in the RB-Corridor and Falls Church submarkets. Tenant will want flexibility and embrace shorter lease terms.

- Market Rent: $22.00 - $25.00 NNN (under $30.00 psf full Service)
- Lease Term: 3 - 5 years
- Annual Escalations: 2.75% - 3.0%
- Tenant Improvements: $15.00 - $25.00 psf ($47,925 - $80,000)
- Rent Abatement: 3 - 5 months
- Vacancy Period: Likely minimum of 6 months, but 12 months or more is very realistic.

V SALE OF PROPERTY

USER Sale: Given the extreme lack of available free-standing office buildings (5,000 – 20,000 sf) FOR SALE in Arlington County and the City of Falls Church, we certainly think
a USER sale would generate the highest sales price for the Seller.

Likely Buyers:
- Schools / Daycare Uses
- Tech USER looking for their own non-traditional HQ building
- Contractors - Service Industries
- Medical Practices
- Craft Brewery

Redevelopment Sale: This Property is also a desirable redevelopment project that could be converted to residential or senior housing. Generally it takes 18 – 24 months before
a developer would be able to achieve the re-zoning and site plan approvals from Arlington County that are necessary for redevelopment. In theory, a Developer can put the
Property under contract, with deposits going “hard” at certain stages of the approval process. They would likely ask the Tenants (and Fedlock) to “Leaseback” their respective
spaces until closing can occur. There are few possibilities for redevelopment:

• Townhomes: This site can accommodate approximately 23 – 24 townhomes (20’- 40’). Townhomes are NOT permitted “By-Right” in the current C-O-1.0 zoning, and
would require a re-zoning approval from Arlington County which would take at least 12 months, then another 8 – 10 months for site plan approval. (18-24 months before
closing can occur).

• Single Family Homes: Single family homes are permitted By-Right, and could likely yield eight (8) single family detached homes with lot sizes of
(60’ x 100’). That said, the houses could probably not be sold high enough for the proper yield for the Seller and Developer.

• Multi-Family: Likely achieve thirty – forty (30 – 40) units in the 1,500 – 1,800 sf range (elevator served) with a special exception from Arlington County.
Assume 12 – 20 months before approvals could be in hand for closing.

• Senior Housing: Given the site is just over 1 acre, senior housing developers could likely develop a 75,000 – 100,000 sf building (5-6 stories with under-
ground parking). This too would likely take 18 – 24 months to get obtain approvals.

In our opinion, the Multi-family or the Senior Housing option is likely the best scenario for Redevelopment. While both options would take at least 18 months to close, it may
allow for adequate time for Fedlock and other existing Tenants time to relocate, or close their businesses. A residential developer will pay closer to the asking price if a Seller is
willing to give them a longer “runway” to close, which is after zoning and site plan approvals are obtained. If a Seller wants a quicker close, the sales price is discounted because
the zoning risk and carrying costs fall onto the Developer.

To generate the most interest / tour velocity for the building, we recommend an asking price below $400 psf to coincide with recent sales comps in N. Arlington (specifically,
5328 Lee Hwy). Our suggested “USER” asking price is:

- 21,596 sf x $389 psf = $8,400,000

We would expect offers to come in starting at $7,350,000 ($340 psf), up to closer to the asking price of $8,400,000 depending on the USER / Developer, and timeline to close.

SALES COMPARABLES | OFFICE/FLEX (2017 - 2020)

123

5328 LEE HWY 1515 CHAIN BRIDGE RD 2920 S. GLEBE RD

ARLINGTON | VA MCLEAN | VA ARLINGTON | VA

CLOSE DATE: February 13, 2020 CLOSE DATE: January 15, 2020 CLOSE DATE: October 5, 2017
BUILDING SIZE: 13,440 SF BUILDING SIZE: 28,936 SF BUILDING SIZE: 15,649 SF
SALE PRICE: $4,750,000 SALE PRICE: $12,070,000 SALE PRICE: $3,885,000
($) PSF: $353.42 ($) PSF: $417.13 ($) PSF: $248.26
LOT SIZE: 19,602 SF (0.45 acres) LOT SIZE: 97,139 SF - (2.23 acres) LOT SIZE: 27,312 SF - (0.63 acres)
BUYER: Goddard Schools BUYER: Sunrise Senior Living BUYER: Arlington County
SELLER: Dante Consulting - KLNB represented SELLER: Wilkins - Rodgers, Inc SELLER: Galena Gapital Partners - KLNB represented
NOTES: Sold to a Goddard School Franchise NOTES: Sunrise bought this to convert to a 140 bed assisted NOTES: Sold to a Goddard School Franchise
Under contract for 10 months prior to closing living facility. Price per acre was $5.4 M. Under contract for 10 months prior to closing

4 5 6

6711 LEE HWY 1401 CHAIN BRIDGE RD 5328 LEE HWY

ARLINGTON | VA MCLEAN | VA ARLINGTON | VA

CLOSE DATE: June 29, 2018 CLOSE DATE: December 29, 2017 CLOSE DATE: May 7, 2020
BUILDING SIZE: 20,933 SF BUILDING SIZE: BUILDING SIZE:
SALE PRICE: $9,000,000 SALE PRICE: 17,019 SF SALE PRICE: 8,640 SF
($) PSF: $429.94 ($) PSF: ($) PSF:
LOT SIZE: 74,091 SF - (1.70 acres) LOT SIZE: $5,945,000 LOT SIZE: $8,800,000
BUYER: Three Peaks, Inc BUYER: BUYER:
SELLER: East Harbor, LLC - KLNB represented SELLER: $349.32 SELLER: $1,018.42
NOTES: Former Sun Trust Bank site on 1.7 acres. NVR developing NOTES: NOTES:
into 27 (3-4 story) townhomes. Price per acre was $5.3 M, 25,265 SF (0.58 acres) 56,092 SF - (1.29 acres)
walkable to the East Falls Church METRO station
Three Peaks, Inc Arl. Partnership for Affordable Housing

East Harbor, LLC - KLNB represented American Legion Post 139

USER/Investor who bought the building to occupy Former American Legion Post 139 - 1.3 acres, Plans for a
some space, and lease out vacant space. Underground 160 units for affordable housing project. Zoned R-5. Took
parking almost 4 years to close due to rezoning and site plan
approvals. 26 months to construct, opening mid 2022

SALES COMPARABLES MAP

5328 LEE HWY 5 klnb.com

ARLINGTON | VA 2 MCLEAN 6711 LEE HWY

1 ARLINGTON | VA

1515 CHAIN BRIDGE RD 449955 4 1 4
6
MCLEAN | VA 6666 1401 CHAIN BRIDGE RD
ARLINGTON
2 3 MCLEAN | VA

2920 S. GLEBE RD 339955 5

ARLINGTON | VA 3445 WASHINGTON BLVD

3 ARLINGTON | VA

6

289 Hooes Rd 95
ems Rd
Lois
Burke Lake Park

Old Pa

S
Burke
643

VI MARKETING PLAN & BROKERAGE RESPONSIBILITIES

• DEVELOP CUSTOM Tysons 495
MARKETING MATERIALS
• INSTALL NEW LEASING Fairfax County | Virginia TYSONS CORNER TYSONS CORNER CENTER
SIGNS/BANNERS
• VIRTUAL TOURS - Google Earth Por - 123
• MARKET PROPERTIES ON KLNB 2018 Aerial Photograph
WEBSITE, COSTAR, LOOPNET ETC PIKE & GALLOWS While we have no reason to doubt the accuracy of 7 LEESBURG PIKE
• EMAIL MARKETING CAMPAIGNS any of the information supplied, we cannot,
TO BROKERS & TENANTS (OVER 8027 LEESBURG PIKE & 1934 OLD GALLOWS ROAD and do not, guarantee its accuracy.
6,500 APPROVED CONTACTS) TYSONS, VIRGINIA
THE BORO

7

GREENSBORO

123 8320 OLD COURTHOUSE RD
MERRIFIELD
VIENNA OLD COURT HOUSE ROAD

8065 Leesburg Pike, Suite 700 MARC TASKER, CCIM, SIOR JACK REGLER 8065 Leesburg Pike, Suite 700
Tysons, VA 22182 [email protected] [email protected] Tysons, VA 22182
703 268 2700 703-268-2735 703-268-2740 klnb.com
klnb.com
1960 GALLOWS ROAD 1960 Gallows Road, Tysons, VA 22182
7MA0RC3T-A2SK6ER8-2735 Fairfax County
2nd Floor Plan |1,925-3,015 SF
JACK REGLER AVAILABLE
1,090 SF
703-268-2740
LEASED AVAILABLE
SPEC SPACE

1,925 SF

LEASED

LEASED

Marc Tasker, CCIM, SIOR Jack Regler *Renderings. Furniture not included
[email protected] [email protected]
703-268-2735 703-268-2740 FLOOR PLANS

8065 Leesburg Pike, Suite 700
Tysons, VA 22182
klnb.com

CLICK HERE TO WATCH
A VIRTUAL TOUR

VI MARKETING PLAN & BROKERAGE RESPONSIBILITIES

5130 WILSON BLVD, ARLINGTON, V1mA 24a202s0s15 1401

MARKETING PLAN MASSACHUSETTS

• Analyze and provide feedback on current market sales and leasing conditions, and interact with client to determine an acceptable sales range and other leasing conditions that would
be typical in the current sales / leasing environment.

• List the Property for Sale or Lease on “Costar” & “Loopnet”, the commercial listing services that is used by majority of commercial brokers, owners and investors. Place “For Sale or For
Lease” Banner signage on the building (if acceptable to Ownership).

NATIONAL NATIONALprospective tenants.
• Create a marketing flyer with all pertinent sales & leasing information, along with as-built floor plans and photos for each floor to distribute to local commercial office brokers and

CITY City• Send out bi-weekly email blasts for the Property to over 1,000 local commercial brokers.
1401 MASSACHUSETTS
AVENUE, NW

• Tour the Property with all potential prospective buyers and their representatives.

• Submit sales / leasing proposals to all interested parties.

• Evaluate all “counter” proposals received. Prepare a qualitative and quantitative comparative matrix. Provide financial cash flow analyses for each proposal.

• Negotiate the Letter of Intent on Owner’s behalf, with Owner’s prior approval.

• Provide comments and insight on the actual Purchase and Sales document or Lease Agreement (if necessary).

• Manage the process on Owner’s behalf between either the execution of a Purchase and Sale Agreement and Closing, or the process between any Lease execution and move-in of tenant.

• Throughout the marketing period, make presentations to Owner whenever necessary.

Note: All KLNB marketing costs will be at KLNB’s sole cost and expense.

VII USER OR REDEVELOPMENT TIMELINE

BUILDING SALES TIMELINE: AUGUST, 2021 4 DECEMBER, 2021

JANUARY, 2021 (CONTRACT EXECUTION PERIOD) (CLOSING)

(KICKOFF PERIOD) - Short list of intersted prospects / Negotiate - 30 days following the expiration of
Letter of Intent (“LOI”) the Study Period
- Execute Listing Agreement - Execute LOI
- Accumulate all property information, including 5
recent renovations, capital improvements and - Determine Seller “Leaseback” terms & Conditions
- Draft Purchase & Sales Contract
architectural drawings - Negotiate & Execute Purchase &
- Order “For Sale” Banner signage Sales Contract
- List the property on Costar & LoopNet
(Commercial Multi-list Services) 23

1

FEBRUARY - JULY , 2021 SEPTEMBER - NOVEMBER 2021

(MARKETING PERIOD) (60 - 90 DAY STUDY PERIOD)

- Begin meeting with interested prospects/ - Buyer performs all necessary inspections - Property Condition
brokers, scheduling property tours Reports, Phase I environmental etc...

- Send out Bi-weekly email blast to over 1,000 - Buyer completes preliminary architectural/engineering/site plan
DC Metro area Commercial Brokers drawings

- Prospecting calls/follow up emails to local - Buyer obtains County approvals or Special Use
businesses permit ( if necessary)

Note: Marketing efforts above would be ongoing and - Buyer finalizes financing
continue until the property is under contract
Note: If the buyer is a developer that wishes to convert the site to multi-
family or townhomes, the Study Period could be 12-24 months. They may
need to get the site re-zoned (12 month process) and then wait until site

plan approval (8-10 months) in Arlington County.

VIII KLNB FEE STRUCTURE

LEASE UP OF VACANT SPACES:

Co-Broker: Six (6%) of the total rent paid over the term of the lease, less any rent abatement. Co-Broker generally receives four percent (4%), KLNB

receives two percent (2%). Commissions are generally paid fifty percent (50%) within thirty (30) days of Tenant’s occupancy of the space.

No Co-Broker (Direct Lease): Four (4%) of the total amount of rents to be paid over the term of the lease (KLNB only), paid in the same 50% /

50% structure above.

SALE:

Co-Broker: Six (6%) of the sales price, paid in full at time of closing.
No Co-Broker (Direct Sale): Four (4%) of the sales price, paid in full at time of closing.

PROPERTY MANAGEMENT:

Three percent (3%) of total gross rents (Triple Net “NNN, to include base rent, operating expenses and Real Estate Taxes), with a minimum
of $2,000 per month.

IX CONCLUSIONS & RECOMMENDATIONS

IN SUMMARY, this Property would have much more interest on a sale basis then leasing. There is only one (1) other property in Arlington County (office / flex) currently
on the market FOR SALE (2701 – 2707 Wilson Blvd). However, there is a tremendous amount of competing office / retail space for lease or sublease in Arlington County
should Phoenix Fitness and BEE vacate in 2021.

Leasing vacant spaces: If PF and BEE decide to vacate their spaces in 2021, and Ownership decides to hold the building, that creates the most challenging scenario going
forward. We forsee their spaces being vacant at least 6 months, but likely a year or longer. Once a new Tenant is identified, that Tenant will expect Tenant Improvement
dollars and several months of abatement. If a new lease is executed 1 year after vacating (assume 5 year lease), a likely timeline could be as follows:

• Vacancy Period: May 2021 – May 2022

• Permitting / Construction Period: June 2022 – October 2022

• Free Rent Period: November – March 2023

• Rent Commencement: April 2023

After Tenant Improvements and Leasing commissions are factored in, a Landlord will not break-even on that 5 year lease until year 2 or 3. Thus Ownership would likely
not see any “net new” rent from a new Tenant until mid-2025. Given this scenario, Ownership would be better off negotiating short-term extensions with PF & BEE at a
reasonable rent structure to bridge the gap of Covid’s economic impact.

Sale of the Building: KLNB’s recommendation is to sell the Building. If Ownership agrees that is the best path forward, our team can list the Building for sale in early 2021
(after the Holidays and when Buyers will be more focused). It would be marketed to all types of buyers as discussed in this proposal at an asking price of $8,400,000,
with a sale likely to occur in the $7,500,000 - $8,000,000 range ($347 - $370 psf). A timeline to close would be dependent on the use, but a realistic timeline for certain
groups of buyers would be:

• IT / Tech Company (Office Use) …………......8 – 12 months

• Contractors / Service Industry ………………..8 – 12 months

• School Use (extended SUP process)………..12 – 15 months

• Medical USER (extended approvals)………. 12 – 15 months

• By-Right Residential conversion……………... 15 – 18 months

• Senior Housing……………………………….............18 – 24 months

• Re-Zoning for Residential (Townhomes)....18 – 24 months

**Note: Depending on the terms of the Sale, Ownership and existing Tenants may need to leaseback for some negotiated length of time before closing can occur.

FOR MORE INFORMATION, GLOBAL EXPOSURE
PLEASE CONTACT:
LOCAL EXPERTISE
MARC TASKER, CCIM, SIOR
[email protected]
703.268.2735

JACK REGLER
[email protected]
703. 268. 2740

JENNY STAINES
[email protected]
703.259.7050

8065 Leesburg Pike
Suite 700
Tys ons , VA 22 182
klnb.com