The Encyclopedia of Commercial Real Estate Advice

CHAPTER 7Unlocking Hidden Wealth with Repositioning

“How did you even think of doing that?” I remember asking Ann Clouse. “I saw the whole finished project in my head just as you see it today,” she answered.

In 1992, Ann had found an abandoned poultry warehouse on the bank of a roaring creek in the tourist town of Ashland, Oregon. Her idea was to change it to a boutique hotel with a restaurant. But that's not all. All the living quarters would be small apartments with different themes. One would be designed like a traditional Japanese ryokan; another had an antique French scheme that would have been recognizable to Marie Antoinette. There were seven large suites, each decked out with its own theme. The hotel was a huge success.

Ann was a retired set designer from Hollywood. I am sure she did not know she was repositioning, let alone repurposing commercial real estate.

Repositioning refers to making management or physical changes to a property to improve its earnings and value in the marketplace. Repositioning can be as simple as raising rents and lowering expenses or as complicated as rebranding the property with a new name and look or doing major rehab. I have been amazed at what my clients have come up with to bring a humdrum property up to its unrealized potential. The best of them had a knack for unlocking the hidden treasures that others missed to increase the property's value without spending too much money to pull it off. Repositioning is where the real estate investor ...