Commercial Real Estate

Greg Mahalick

Chip LaFleur and Greg Mahalick have been tasked with launching Samuel Mancino’s Italian Eatery locations Grand Rapids- a task we are extremely excited about! I have also had the pleasure of knowing Sam Mancino for several years now and his moral character is only outshined by the focus and time he provides to his franchisees.  A quality in an owner that any franchisee will tell you is worth its weight in gold!

Years of development, planning, and perfection have gone into creating their famous grinder sandwiches, pizzas, and many other Italian inspired cuisine. This is truly a franchise opportunity that strives to maximize your return on investment.  They achieve this through many avenues, improving operational efficiency without sacrificing customer satisfaction: comprehensive systems and manuals to guide your operation, personal guidance from top management to avoid costly mistakes due to inexperience, & the power of volume purchasing through a national account at the corporate level.

A survey conducted on 600 Samuel Mancino’s customers reported that the majority; eat at Samuel Mancino’s because of the superior food quality, visits multiple times each month, & first frequented the restaurant due to positive word of mouth!

Currently, the Grand Rapids market place franchise “rights” are available- open 1 or 10 Samuel Mancino’s- the choice is yours.  Start up costs are minimal and franchise royalty rates are more than fair- this is a solid opportunity for the right investor/owner operator.

With market presence & brand awareness throughout the Midwest (MI, OH, WI, & IN) Samuel Mancino’s Italian Eatery continues to strive for excellence & quality!  Give Greg Mahalick or Chip LaFleur a call today for a full franchisee packet & additional information at 616-459-8000.

4044 South Division

4044 South Division has been one of the most active properties in our portfolio; we showed the property multiple times nearly every week.  We also received a handful of offers, everyone looking for a great deal, as the economic times seem to necessitate.  But we certainly didn’t expect to get a deal done within a couple of days from our initial showing to the purchaser!

Our first showing to the new owner of this property was on Monday afternoon; the buyer was somewhat familiar with the building already, having stopped in when the building was occupied by the previous business a few years ago.  Apparently the building fit his needs exactly, and he made a verbal offer on the spot.  After some fairly brief negotiations, we arrived at a purchase price and terms that suited both parties, and drew up a purchase agreement which we had signed by Tuesday.

The buyer chose (against our advice) to forgo inspections, survey, and the environmental survey, and just wanted to have possession as soon as possible.  Commercial First Title was able to procure all the necessary documents for us, and so within 48 hours of the signed purchase agreement buyer and seller were seated at the closing table in the McKay Tower on the corner of Monroe Center and Pearl, about a block from our office.  The closing took about a half an hour, and everyone left excited and feeling great about the transaction.

If you happen to be in the area, make sure you take a look at the construction and improvements taking place, I think that you’ll see an exciting retail store opening up within the next month or two at 4044 South Division.  As Greg and I comb the area and work on the listings that we have up and down South Division, we’ll work on getting some photos of the progress and post them here as well.  If you’d like any additional information please feel free to contact me at clafleur@ccmichigan.com!

Click to View Listing

Attention All,

2165 Alpine (previous home of Palermo’s Pizza) offers 1,500 sq ft of retail space with an additional 800 sq ft apartment (newly remodeled) upstairs.  Lease rate reduced from $7 a sq ft to $5.50 a sq ft!  Sale price reduced from $197,000 to $147,000!!!  All reasonable offers considered & land contract terms are available!  This opportunity will not last, perfect for an owner occupied situation (live upstairs & work down), run your business & lease the apartment for additional revenue, possibilities are endless!  Call Greg Mahalick or Chip LaFleur today to schedule your showing: 616-459-8000.

Click HERE for Sale information, click HERE for lease information.

Commercial Sales

Industrial Office Retail

As a follow up article regarding commercial leasing, this article is the current market study for commercial sales of retail, office, and industrial buildings actively being marketed on the Grand Rapids MLS system (www.carwm.com) compared to the rate of sales reported.  Again, this study does not factor all of the deals that have been completed, as some might have not been reported as sold or closed and others might have closed between owners without using the commercial MLS system.  Additionally, numbers stated for 2009 were year to date from November 6, 2009.

Retail

In 2007, there were 15 transactions completed in the 1500-3000 SF range compared to 6 completed in 2009.  From 2008 to 2009, there was a decline of only 1 retail center in the 3000-10000 SF category from 10 to 9, however, in 2007, there were 21 completed transactions in this same category, a 57% decrease.

Office

Sales of office buildings have declined in all categories studies.  In 2007, 24 office buildings sold from 1500-3000 SF, while only 8 sold in 2008, and 5 sold in 2009.  Office buildings in the category of 3000-10000 SF sold in 2007 were 34, while in 2008 were 15, and 2009 were only 11.  The largest category studied were buildings 10000 SF on up.  In 2007, 19 were sold, while in 2008, only 13 were sold, down to only 6 being sold in 2009.

Industrial

All industrial sales were down in every category apart from 3 report sales in the 0-1500 SF range.  In 2007, 15 buildings sold compared to 12 in 2008, while only 3 sold in 2009 thus far.  In the larger category of 10000 SF on up, 34 buildings sold compared to 29 in 2008, while only 11 sold in 2009 year to date.

2009 Year to Date Closed Sold Transactions

2009 Active Listings On Market

Years of Supply Currently On The Market

By averaging out all categories in retail, office, and industrial from 2007, 2008, and 2009 thus far, we are able to take the current listings on the market and identify how many years of supply we currently have available.  (See chart)

According to this chart, those that have properties on the market in retail over 10000 SF, have over 10 years of supply on the market.  Those that have office buildings above 3000 SF, can expect a 6 year glut of inventory on the market.

That being said, how can you take a difficult category and make your space actually be counted on the 2010 report as space that was sold?  Pricing and location are the two key components in selling your building in today’s market.  However, the third component is financing.  You can have price and location, but financing is the component that will clog the pipeline.  Alternatives to conventional financing can be discussed with your professional commercial agent.  You can’t help the location as to attracting a buyer. However, you can adjust pricing.  If you are in the 5% lowest price point in the market, you have a great chance being included in the search option as agents pull the listings and ear-mark your property as worthy of consideration for their prospective buyers.

Where does your listing fall in pricing compared to the large supply of properties that are currently active in Kent County?  Call us today as your commercial real estate agent to help you in establishing the market price as well as getting your listing viewed by those that are actively looking for space!

38 Commerce is a wonderful development that’s flying forward, here’s a great video overview of the project.  For more information, go to their website: http://38-gr.com/

Economic Development Foundation

SBA 504 November Rates

Both 20 and 10-year debentures were sold this month.  The effective SBA 504 November 20-year rate remains near the all time  low at 5.03!  The effective 10-year debenture rate is 4.14%.

Last month the Federal Government announced a proposal to increase the SBA 504 cap.  The current cap is $2 million (public policy goals) or $4 million (manufacturer) and the proposed increase is $5 million!  This has several advantages for both lenders and borrowers which are discussed below.

The second article below is an update on the stimulus bill. SBA is anticipating the stimulus money to run out by early December.

There have been many changes to the SBA 504 program.  Many of the changes have been positive for both the banks and borrowers.  We encourage you to give us a call to discuss any eligibility questions you might have.  Also, EDF would be happy to come to your office and give a short presentation (Free!) detailing the SBA 504 program and all the changes that have taken place over the past year

Cap Increase

The Federal government has announced a proposal to increase the cap on the size of the Small Business Administration’s 504 loans from $2 million to $5 million.

Currently the maximum loan under the program is $2 million (or $4 million for manufacturers).  The percentage of 504 loans for more than $1.5 million has grown, from 15% of all dollars loaned in 2005 to 28% in 2009.  This expansion of the cap on the size of SBA 504 loans will allow small businesses to undertake larger projects.

More importantly, this proposal will be very beneficial for borrowers who have current SBA loans and are “maxed” out at the $2 million mark.  This will let the borrowers use the SBA 504 program on multiple projects (until the max at the $5 million).

Stimulus Bill Update

SBA announced that they anticipate the stimulus money for the SBA 504 program to run out early December.  If an authorization shows the fee reduction, the borrower is guaranteed the stimulus benefit.  In order to receive the fee reduction the borrowers must obtain an authorization before the stimulus money runs out.

What will stay in place is the refinance option that was introduced as part of the stimulus program.  This gives the borrower an option to include existing debt into the new SBA 504 project.

EDF Contacts

Sandy Bloem
Executive Director

sandy@growmichigan.com

Gary Witkowski

Relationship Manager

gary@growmichigan.com

Ph.  616-459-4825
Fax 616-458-5736
TF   888-330-1776

Chad Razmus

Commercial Leasing

Industrial Office Retail

One of the key factors in leasing out space is the demand in the market and the current supply that has saturated the market, especially here in West Michigan.  After reviewing the office, retail, and industrial market in Kent County from 2007 to 2009 year to date, here are some interesting findings.   Keep in mind that these numbers are from the Commercial Alliance of Realtors website (www.carwm.com) and does not reflect actual activity in the market, as there are leases completed that never post to the site for our reference.

Retail

The retail market has seen a slight increase from 2008 to 2009 in the 0-1500 SF range.  However, in 2007 and 2008 there were about 44 transactions completed, which dropped to less than 24 in 2009 thus far, a 45% decrease.   In 2007 and 2008, there were about 25 transactions completed in the 3000-10000 SF range, which dropped to less than 5 in 2009, an 80% decrease in that sector.   In all of Kent County, there was only one deal above 10,000  SF that was completed compared to 5 and 7 from 2007 and 2008 respectively.

Office

The office market has also shown signs of good activity in the smaller range of 0-1500 SF with 84 transactions thus far, compared with 87 in 2008 and 106 in 2007.  However, in 2009, we are down 53% from last year in the 1500-3000 SF range of leased office space and 57% down in the 3000-10000 SF range from 2008.  In 2008, 16 transactions were completed over 10000 SF, but only 2 in 2009 year to date.

Industrial

The industrial market has remained steady from 0-10000 SF.  However, from 10000 SF and higher, a 62% decrease occurred from 2008.  Currently, there are 358 active listings in this category or a 17 year supply on the market.

2009 Year to Date Closed Lease Transactions

2009 Active Listings On Market

Years of Supply Currently On The Market

By averaging out all categories in retail, office, and industrial from 2007, 2008, and 2009 thus far, we are able to take the current listings on the market and identify how many years of supply we currently have available.  (See chart)

If you have a 15000 SF retail suite and are hoping for a tenant, be prepared for waiting 15 years to get one based on active listings on the multiple listing service.  If your office space falls into the 3000-10000 SF category, there are 16 years of supply on the market.

That being said, how can you take a difficult category and make your space actually be counted on the 2010 report as space that was leased?  Pricing and location are the two key components in leasing out your space before your competitors.  You can’t help the location as to attracting a tenant. However, you can adjust pricing.  If you are in the 5% lowest price point in the market, you have a great chance being included in the search option as agents pull the listings and ear-mark your property as worthy of consideration for their prospective tenants.

Where does your listing fall in pricing compared to the 17 year supply that is currently active in Kent County?  Call us today as your commercial real estate agent to help you in establishing the market price as well as getting your listing viewed by those that are actively looking for space!

Rachael Ruiz tours 38 Commerce, video is from Off Limits on eightWest.  Sorry about the ad at the beginning, there was no way to embed the video.  But please sit through the 15 second ad and get an inside look at a really exciting development!

Click HERE for Video (Opens in a new window).

Click Photo for More Information

2905 Lucerne Cascade Township, MI

We have reduced the selling price on this professional office building located in The Centennial Office Park. This beautiful office facility is located in Cascade Township easily accessible to I-96, the Gerald R. Ford International Airport and a multitude of retail amenities.

If you have ever considered owning your own office in the past, now is the time to buy with interest rates at their lowest and possible seller financing. This property has a tenant in place in half the building making it a desirable owner occupied investment opportunity. If you are looking for 6,000-15,000 square feet of space, the building could be the investment for you. Or if you are looking to lease, this well maintained property offers the most competitive lease rates available.

Please call Pamela or Diane @ 616-459-8000 for a tour today.

Sandra Clark

With such a large portion of commercial/industrial real property transactions comprised of foreclosed or other troubled properties, bargain hunters should be aware of the increased liability risk beyond that evaluated as part of a typical Phase I Environmental Site Assessment.

The following are items we encounter frequently that might be overlooked by buyers:

• Did the recent property occupant generate any waste?  Medical waste, hazardous waste, etc.?  more often than not, when a building owner/occupant is strapped for cash, proper waste disposal becomes the first operating expense trimmed from the budget.  Sometimes wastes are in plain site, sometimes dumped into a septic system or oil/water separator.  In one instance, a foreclosing lender acquired a warehouse full of paint and related product – only the warehouse had not been climate controlled, and what looked like new product was regulated waste, and carried a six-figure disposal cost.
• Is there new damage to the building?  Water damage from a roof leak, broken boiler pipes, failed sump pump?  Vandalism, copper plumbing thieves?  If so, consider the possible liability of (now) friable asbestos building materials or mold growth…and the possible health exposure you might risk if you enter that building.

Sandra Clark is President and Owner of Applied EcoSystems – Great Lakes, Inc.  She is a graduate of the University of Michigan and is a Registered Environmental Manager with over twenty years of diverse experience in managing and conducting all phases of environmental site assessments.

She enjoys working with real estate professionals, investors and lenders in facilitating commercial property transactions through the identification, assessment and management of environmental liability risk.  Her company has successfully operated throughout Michigan and the Midwest since 1998 on the principal of client satisfaction through practical and cost effective environmental solutions. Sandra can be reached at (810) 715-2525 or sandyclark@comcast.net.