Facilities once housing a strip club, motorcycle dealer, toy store undergo radical changes after the sale
The old founders of Louisville, KY, may have pondered the kinds of community landmarks that would someday dot their area. If they did, they probably didn’t have Trixie’s Entertainment Complex in mind.
“It had quite a story to tell because, even though it’s a strip club, it’s a strip club that everybody in this town knew,” said Bill Menish, CAI, AARE. “It was a landmark in this town.”
Menish is Managing Director of SVN | Premier CRE & Auctions in Louisville. In November, he coordinated the auction and sale of the Trixie’s property to a business owner who immediately began converting it into an Ethiopian community center.
Such radical transformations have become common these days in commercial real estate.
“With the red-hot economy that we have right now, it’s so much easier to buy something with good bones that you can transform into what you need – you’ll save a fortune,” Menish said. “Plus, think about it: Most of the time, these buildings were put in pretty good locations.”
The $522,000 sale of Trixie’s and its subsequent conversion into a completely different function isn’t the first such deal for Menish. He’s seen many similarly repurposed properties.
For example, he auctioned off a huge skating facility in the third quarter of 2019. There was great interest in the Louisville property by people of various backgrounds, including a classic car collector. In the end, a retailer acquired the facility with plans to revamp it for the new use.
In Columbus, IN, a few years ago, Menish sold a large hotel building off I-65 that also drew an abundance of interested parties, including auto racer Tony Stewart. After the SVN auction, work commenced to convert the facility into a hospital.
Such properties come available regularly, Menish said. “If you have a one-story warehouse situation with an eight- or 10-foot-high ceiling, that doesn’t match what warehouse people are looking for today,” he said. “And it stands a very good chance of being turned into something else.”
Other SVN advisors have benefited from the repurposing phenomenon. Mike Halimeh, a senior advisor for SVN Florida, managed the sale of a Lake Wales, FL, property in 2015 that had housed a Harley-Davidson dealership. The buyer, Merlin Entertainments, used it for a Lego international assembly plant.
Halimeh said that in addition to saving money, repurposing a property also has the advantage of cutting out red tape that can encumber new construction. “It’s already there, so it’s sometimes easier to work with an existing structure than go through the process of zoning, site plans, engineering plans, permits,” he said. “You save time and money.”
Accordingly, he’s been successful in marketing properties that have undergone radical changes after the sale. In June 2019, he sold a building that had been a Toys “R” Us store, and the new buyer is converting it to a Planet Fitness location. Years ago, another buyer acquired a Sonic Drive-In restaurant property and turned it into an AT&T retail store.
Of course, not all buildings are suitable for repurposing – at least not for all potential buyers.
“Sometimes the structure is way off, and the cost of repurposing would be expensive,” Halimeh said. “Especially if there’s food involved. Or if you have to move loading docks around, it can be costly.”
Currently, Halimeh is marketing a sprawling building that was once a Sears store at the Eagle Ridge Mall in Lake Wales. The property, which contains 130,000 square feet, has attracted interest from a government institution and an airline considering it as a training center.
The idea of repurposing appears to be taking hold in various sectors of the market.
“We’re moving in that direction,” said Halimeh. “The market is absorbing some of the big boxes [large retailers] and the vacant restaurants, and existing old buildings. A lot of retailers find it much easier to buy them and repurpose them to save the money and time.”