Editor's note: This version adds details from Cape Fear Commercial's contract, as outlined in its proposal, with the city.

After outscoring two other competitors, Wilmington-based real estate firm Cape Fear Commercial won the leasing services contract for the city of Wilmington’s recently purchased 12-story office building.

The former headquarters of contract research organization PPD at 929 N. Front St. could include five floors available for lease after the city occupies five others and PPD leases back two. In July, the city completed its $68 million purchase of the building, the tallest in the region, from PPD owner Thermo Fisher Scientific Inc. 

In addition to Cape Fear Commercial (CFC), two other companies headquartered in Wilmington submitted proposals to provide the leasing services – Coldwell Banker Commercial Sun Coast Partners and The Braddock Group.

The acquisition allows the city, according to officials, to replace defunct and scattered government offices for a cheaper amount than renovating and/or rebuilding existing facilities. 

“From the beginning the city has articulated as a part of its overall plan the leasing of any unused space within the building at market rates, and these leasing services will enable the city to execute that part of its strategy,” said Aubrey Parsley, the city’s director of economic development, during the Wilmington City Council’s regular meeting Tuesday night.

The council voted unanimously to go with CFC. City Councilman Charlie Rivenbark, who is a senior vice president at Cape Fear Commercial, recused himself before Tuesday night's vote on the CFC contract.

“They had nine of the top 10 largest class A commercial leases over the last year. The team assembled had a very well-documented set of expertise and projects in class A office space. They also stood apart from the other candidates in terms of articulating a strategy for how this space would be positioned on the market,” Parsley told the council Tuesday. “And they were also rated highest with respect to fee structure, meaning the selection committee considered their fee structure and rate structure to be the most competitive of the bunch.”

That fee structure, according to the company's proposal, would compensate CFC with 4% of the total aggregate value of the initial lease term if there is not a tenant representative broker or 7% if there is, which would be split equally with that cooperating broker.

"Fifty percent (50.0%) of fees will be due at lease execution and fifty percent (50.0%) will be due at rent commencement. For lease renewals, an amount equal to three percent (3.0%) of total aggregate value of lease term," the proposal stated. For managing the property, CFC is expected to get 2.25%, with a minimum of $3,250 per month, according to the proposal.

CFC also explained its timeline for the lease-up of the leftover space in 929 N. Front St. During the first month, CFC's steps include:

• Multiple meetings with the City to identify objectives and strategic planning
• Discuss pricing strategy (including whether to set an asking rate)
• Understand the City’s future expansion needs and how to apply that to the overall strategy
• Analyze options for delivery conditions, upfit allowances, parking, access/rates for amenities, etc.
• Meet with the City and its architect to discuss the logical and most efficient subdivisions of floors
• Simultaneously begin working on the marketing package, which will be presented to the City and fully approved before distribution
• Information collection, strategic planning and underwriting of potential options
• Making preliminary calls to brokers and prospective tenants
• Preliminary tours will commence

In the second month, CFC plans to implement its formal marketing strategy, according to the firm's proposal, including but not limited to:

• Online advertising, including the local and national listing services such as the local MLS, Costar, etc
• Direct calls and emails to prospective tenants, local and regional brokers
• Outreach to national brokers who represent large multi-market tenants
• Working with the local economic development organizations to inform them of the opportunity, including WBD, Wilmington Downtown Inc. etc
• Email blasts

Out of the three firms that submitted proposals, CFC received the highest score for its submission, 263 out of 300, while Coldwell Banker Commercial scored 207, and The Braddock Group scored 182. Each member of the city's selection committee was given 100 points to assign to each firm based on the criteria below:

• 25% Professional track record, past accomplishments
• 25% Proposed strategy
• 15% Qualifications and experience
• 15% Proposed commission rates, fees and cost of services
• 10% Anticipated leasing schedule for first 40,000 square feet
• 10% Other factors as determined by the selection committee (such as knowledge of statutory requirements for local units of governments to lease real property, presentation quality)

The process to solicit proposals for the leasing services began in April, with finalists notified May 8 and interviews conducted during the week of May 22, Parsley said. 

In an email Wednesday, he said, "Between my outreach and the outreach of our economic development partners, at least 8 firms were directly made aware of the opportunity. We also published the advertisement on our website."