CBRE Bait and Switch

cmp-logoYesterday, CBRE presented its draft of the Memorandum of Understanding that would make Miami-developer MCM-BAP the master developer of the remaining parcels of the Community Maritime Park.

CBRE has changed its commission on the deal. The city contract has the real estate broker getting a four-percent commission for the lease fees of real property owned by the city. The proposed MOU has the developer paying them $2.5 million at close. Yes, the city would no longer have to pay a commission, but the $2.5 million will be added to cost the projects, making any retail space, apartments and condos that much more expensive.

In turn, the city will receive $275,000 annually in lease payments, but those payments will not start for another 18-24 months. Also it’s clear that a parking garage will be needed on the property at some point and the city will probably be expected to contribute towards that through a bond issue.

CMPA board member Fred Gunther questioned the new CBRE arrangement.

“The CMPA board and City executed an exclusive listing agreement with CBRE,” said Gunther. “That agreement requires that the city agree to pay 4 percent of the gross lease, capped at 30 years…There was nothing in that agreement to allow the broker to pursue a separate fee from a potential tenant, buyer, whatever.”

He complained that an RFP was issued in September for a master developer- which Gunther never saw – that required that required the sublessee to pay a success fee equal to 4 percent of the total buy-out.

Gunther said that he talked with a former CBRE broker who told him that he had never heard of such a thing. Anything that the CBRE gets over and above the original agreement should go to the city or CMPA, according to Gunther.

The developer’s representative said the fee arrangement in the RFP was standard for their public-private partnerships. He said the city manager had agreed to it in September. (I assume he means Dick Barker, who is the interim city administrator.)

In the end, the CMPA voted to continue negotiations and moved to have it sent to the Pensacola City Council. Only Gunther and Justin Spence voted against it,

Chairman Jim Reeves last words on the matter were – “Remember we have been burned before.”

Editor’s note: My earlier mistakenly had Jonathan Thompson voting against the motion. It was Justin Spence.