Investing vs Value-Add

[Nicholas LaRocca]

I've been looking through CRE listings in my area on LoopNet and practicing making pro-formas on them. I know about core, core-plus, value-add, and opportunistic but I'm curious what exactly falls directly into each of these. For instance, in a CRE book I recently read the guy said all of his deals have had IRRs ranging from 7-24%, this seems like on the lower end it would be core/core-plus and on the higher end getting into value-add. This all seems quite simple but I came across a property that I didn't know which category it fell into or if would be considered opportunistic, say more like a redevelopment. It's a $2m property in the heart of the downtown of my city, top floor was previously an office and bottom two floors were a club. This area has strong office rates for B class buildings ~$24.5 and the building, depending on the remodel, would have roughly 12,500 in usable sq ft. The building is currently completely vacant. Obviously you'd have to spend a lot of money to change the propose of the building upfront but once everything is renovated and leased it seems like the property would be closer to something like ~$3m. So, which category would this fall into? Thank you!