Selling hall needn’t
be end for fraternal groups

Recent news that the Veterans of Foreign Wars Hall in Everett is being put up for sale fits a pattern that many other fraternal organizations are falling into. To members, it often feels like the end.

The reality at play is that dwindling membership in recent years eats at the revenue these organizations need to operate, eventually forcing them to sell off what is usually their biggest asset — the building they’re in — to make ends meet. Just in Everett alone, three very visible fraternal organizations have sold or have made arrangements to sell the buildings they have been in for years. It’s happening all over the country to fraternal organizations.

But it’s not all bad news. Some of them are deploying a real estate strategy that winds up making them even stronger.

The strategy works like this: Take proceeds from the sale of the building; buy an income-producing, multiple-tenant strip center or small neighborhood shopping complex; move the fraternal organization into one of the suites; and become a landlord occupying space in your own income-producing building. With this strategy, organizations enjoy the income from the balance of the property they bought while sizing themselves into what they truly need going forward.

The toughest part is that competition to buy an appealing property is stiff. It often surprises these organizations that deciding to go this route doesn’t assure them they’ll be able to execute. So many buyers looking for very few openly “for sale” income properties means these organizations need either professional assistance or good luck in order to find a suitable new home.

But because they are a destination of their own, often, fraternal organizations can make sense out of a strip or mixed-use-type of center that might be burdened with a less desirable retail suite. Perhaps a property with a suite that offers an awkward entry that the leasing market doesn’t like but which the fraternal organization can make fit just fine means they can make a go of it while other buyers might pass.

Most fraternal organizations need a kitchen facility, so another strategy is to buy a former restaurant location and convert it for their use. Many strip centers have restaurant locations that go dark and often make them a good fit.

Being in the landlord business isn’t for everyone, so organizations need to think that through or decide to hire a property manager in advance. But many find they actually improve and stabilize their organization from this strategy and offer a brighter future than they had before, when they were feeding a facility too large for their present-day needs.

Tom Hoban is CEO of Coast Real Estate Services, a commercial sales, leasing, investment and property management company with offices in Everett, Tacoma, Spokane, and Boise, Idaho. He can be reached at 425-339-3638 or send e-mail to tomhoban@coastmgt.com.