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From around March 2007 onwards, the owners of development land in Cork and elsewhere found themselves in the unenviable position of watching land values falling rapidly due to a general decline in the residential property market. As a result, a number of major development sites in Cork failed to sell. As the months rolled on, developers’ problems were exacerbated by the impact of the international subprime crisis, which led to banks’ reluctance to lend capital for property development purposes.
This was the backdrop against which the Jones Lang LaSalle Development team was briefed by Motorola, following its decision to close its 9,234m2 (99,395 sq ft) facility on a 4.3 hectare (10.7 acres) site in Mahon, Co Cork.
We concluded that negative market sentiment notwithstanding there was, nonetheless, significant development potential in the land surrounding the Motorola plant to merit marketing that element of the property separately. We advised Motorola to bring the site to market quickly, in order to maximise the price, and in order to deliver the desired revenues by their December 2007 target date.
We identified a number of key property developers who might be interested in the site and contacted them directly prior to launching an extensive marketing campaign in May 2007.
Our strategy worked. We encouraged developers to submit their bids throughout May/June, and we then drove the process to ‘best bids’ in July 2007.
While we were pleased to receive a number of bids, we were also acutely aware of the impact that the international credit squeeze and other banking issues were likely to have on the development land market. Furthermore, we knew that while one party had been identified as the preferred bidder, it would be important to ensure that we retained the interest of all of the under-bidders – just in case anything went wrong.
Our combination of caution and prescience proved fortuitous. As it turned out, the highest bidder failed to deliver. We then had to negotiate with the under-bidder and somehow bring them up to a higher level.
This we managed to do, and we finally sold the property four weeks ahead of our client’s December 2007 deadline for a figure in excess of €20 million.
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