Could someone please explain mothballing?
See title. In light of the recent downturn, could somebody please enlighten the group(me) about what mothballing is and why you might do it? Upsides, downsides, strategy, how you might benefit opportunistically in an environment where this is happening are things that I’m curious about. Thanks in advance for your time and knowledge in response!
[{"id": "fmzzbgc", "text": "What I have seen is developers do this sometimes depending on that stage in the project they are in. \n\nSay you just purchase a large old building for a low price, that needs a complete remodel and is going to cost a lot. In times like this it may be better to just put everything on hold and wait until economic conditions are better. Since holding costs would be considered low, it might be worth it. \n\nWhy continue to spend the money when you wotn even be able to rent the space when its completed.", "replies": [{"id": "fn74ge4", "text": "This is basically something I'm doing now. I do repositions of distressed industrial. Am/was halfway through an old (1890's-1970's) brownfield site renovation of approx 250k sq ft. We identified good places to demise the site, renovate one space, then move to the next etc. Anyway we're about 80% renovated and 70% occupied, and now I have gone FULL STOP on renovating that remaining 20%. Everyone paid April rent but I'm switching to complete cash preservation mode, and doubt I will do any more project work in 2020.\n\nThe remaining space will still be sitting there when things pick back up.\n\nAlso - sure I get good ROI on improving the last spaces in a project, but I expect we'll have chances at amazing value grabs this fall. Again full cash preservation now.", "replies": [{"id": "fo1ladp", "text": "Me too. 14,000,000 in equity. No projects only looking for deals this fall.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]