Commercial Real Estate

Chip LaFleur

This may come as a bit of a surprise to many, but in the coming weeks, my family and I are about to embark on a bit of an adventure into the Great American Southwest.  Some family business necessitates a move to the great state of Texas, fortunately one of the few areas of the country that has been little affected by the current economic climate.  And although the economy is not our main reason for relocation, we are glad to be headed off toward a state that is doing well, at present.

That being said, I do have a few things to say as we head off on our journey.  First of all, I thoroughly believe in everything represented by Callander Commercial.  It has been an incredible place to work, and I am not sure that I will ever experience working with such an incredible group of people, led by such an excellent and intelligent leader in Ellie Callander.  In my  time here, we have lacked nothing in the way of tools, instruction, and support in our efforts to market our listings to the public.  Consistently we were given new tools, better technology, and a wider reach by the company.  This has been the result of constant research into new platforms, tools, and technology.  While the technology changes, the means of digging into it and the resources devoted toward determining what is flashy and what is effective are hallmarks of a successful endeavor.  I am confident that Callander Commercial will continue to be a leader in the tools they provide for their agents and brokers.

Over the past year especially, Michigan has endured some challenging times in commercial real estate, and I do not presume to make predictions about where we are going or how we will get there.  But I do believe that the brand of Grand Rapids has only improved over the past year.  We are seeing development, we are seeing a wonderful culture emerge in many ways here in town, and I think that will continue to grow and prosper.  I will enjoy being able to visit and to observe the changes and improvements as they continue to happen.  Grand Rapids will always be my hometown, and I am proud to be from here.  I think we have a great culture of giving back to the community, and I believe that is the result of some outstanding people taking the lead in doing that.  I hope to see that continue here, and I hope to be able to observe such a quality in people when we settle down in Texas.

Over my time here, and especially over the past year, I have been able to enjoy some new relationships that I did not think existed in the world today.  I have gained friendships through work and through community involvement that I will continue to appreciate and hope to maintain, even if we no longer live in this area.  People are beautiful; their qualities are not hard to find and the diversity that we have started to see growing here in town is a testament to that.  I have learned a great deal about acceptance of diversity over this past year.  It has been a lesson that was long overdue in my life, but one that I am glad to have finally gotten my head around more thoroughly.  Individuals here in Grand Rapids have been instrumental in helping me to overcome personal biases that I did not even realize that I possessed, and they have helped me to leave them where they belong: in the past.  I would not be the person I am today without the influence of some of the great people that I have come to know here in Grand Rapids.  I hope they realize the positive impact they have been able to have on me and others as they get to know them.

Of course, there is always room for improvement.  There are and probably always will be people that continue to promote  intolerance.  There are groups that work to enforce an unquestionable authority system, and that work to quiet any dissent.  While such groups can achieve a temporary success, eventually free people will overcome, and those individuals that were unable to have their ideas questioned will find their ideas lacking in substance.  Any sound idea can withstand criticism; those that believe that criticism of an idea is wrong simply support weak, unsound ideas.  I hope to see the people of Grand Rapids and West Michigan continue the trend that I have observed in moving away from ideas that do not stand up to critical thinking and examination.

The commercial real estate culture here in Grand Rapids has grown in this area specifically, and I hope to see it continue to do so.  While it started slowly, the inertia that the commercial real estate industry in Grand Rapids has been building, especially in area of technology, has been increasing with no indication of slowing down.  I have appreciated being able to be involved in some of the changes that have had a broad effect in the commercial real estate world of Grand Rapids.  I hope to see those changes and adaptations continue to take root, to develop and be refined over time.  Good change is seldom quick, so I hope to see people continue moving in the right direction; I have no doubt that they will.

Greg Mahalick and I have had the great privilege of working with some outstanding clients, and I am working on letting each one know about my plans to relocate.  If you are a client and I have not yet been able to reach you, I apologize and will work to correct that as soon as possible.  I will be leaving you in good hands with Greg and the rest of the team here at Callander Commercial in Grand Rapids.  You can be assured of the best possible service and the widest possible marketing net being cast for your properties.

To Diane Karns, Jeanne LaSargeBono, Pamela Collins, Melissa Saylor, and my listing partner-in-crime Greg Mahalick; it has been an absolute pleasure to work with all of you.  You are a unique group with outstanding qualities, and I have appreciated the privilege of having been able to work with you over the last years.  Thank you for being such wonderful teachers, business partners, and friends!  To my colleagues at Callander Commercial in Kalamazoo, keep up the good work as well!  You  own the market in Kalamazoo; continue providing the level of service that you have excelled at through the years that has brought you to the level you have reached!

To the rest of Grand Rapids and West Michigan – keep an eye on this space!  I am working on some things in Texas, when I have them set up, I will point you in my direction.  In the meantime, thank you for everything; thank you for reading this blog and for your interest.  I wish you the best in everything; this is and will always be my hometown – keep putting it more prominently on the map as you have been.  I look forward to seeing great things come out of this part of the world!

Greg and Chip had a great closing experience a few weeks ago, and even received a great writeup from Client, Debora Jandle, L.M.S.W.  The property was small office building right on the edge of Heritage Hill, and the buyer was a law firm looking for a Grand Rapids location.  Always nice to hear from our clients about the work that we are doing, and we certainly hope to have more to add throughout the rest of 2010!

Congratulations to the sellers and the purchasers of a great location near downtown Grand Rapids!

June’s SBA 504 20-year effective rate is 5.29%.  10-year bonds are funded every other month so the next sale will be in July.  The May SBA 504 10-year bond effective rate was 4.61%.  (Rates may vary slightly based on approval date.)

On Thursday, June 3, our Executive Director had the opportunity to attend a Federal Reserve event in which the guest speaker was Federal Reserve Chairman, Ben Bernanke.  The article below highlights the event.

The second article is a repeat of the newsflash sent out last week.  At this time the SBA loan queue is still in place for projects seeking the reduced fees and additional funds have not been approved yet to extend the Recovery Act program.  It is anticipated that this will be approved by Congress in the next few weeks.

Fed Chief Speaks in Detroit

Thursday, June 3, Federal Reserve Chairman Ben Bernanke spoke to a group at the Federal Reserve Bank of Chicago’s branch in Detroit.  Mr. Bernanke’s speech focused on urging banks to do more for Small Business.

Mr. Bernanke stated that outstanding loans to small businesses declined to $660 billion in the first quarter of 2010, from almost $700 billion two years ago.  He wasn’t clear if this is a result of reduced demand or tightened credit standards.

Mr. Bernanke stated that in 2009 only 40 percent of small businesses that tried to borrower had all their needs satisfied.  As a result, he urged banks to examine loan applicants’ businesses thoroughly and to “avoid mechanical, automatic rejections” based solely on the companies’ industry, location or other negative factors.

Our Executive Director, Sandy Bloem, had the opportunity to attend the event held in Detroit. “I’m encouraged to see that the Federal Government is recognizing that small businesses are the engine that will create the new jobs in our economy, and that the owners are having challenges in getting access to capital.  Now is the time for Congress to continue their support for the SBA programs.”

To read the full article:

Fed Chief Urges Banks to Do More for Small Business

Loan Queue

Once again, funds provided by the American Reinvestment and Recovery Act have been exhausted and SBA has reactivated the loan queue.

As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February. An additional $60 million was provided to extend the programs through March. SBA was authorized for an additional $40 million in late March, and an additional $80 million was provided in mid-April to support the programs through May 31.

A bill for extending the fee waivers is currently in front of Congress, however, it has not yet been passed by both the House and the Senate.

Please call EDF for any questions regarding the loan queue.

EDF Contacts

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

Sandy Bloem
Executive Director
sandy@growmichigan.com

Bradd Pierce
Loan Officer
bradd@growmichigan.com

Gary Witkowski
Relationship Manager
gary@growmichigan.com

*Due to the confidential nature of this transaction some information will be withheld without a proper confidentiality agreement in place*

Callander Commercial is very proud to present this local family restaurant business opportunity. Recently remodeled and forecasting $415,000 in gross sales for 2010, this is a great opportunity for a first time owner/investor or a seasoned veteran. Very favorable lease terms, solid loyal following, and great proximity to residential housing makes this opportunity very attractive. It is located on a major thoroughfare averaging 30,000 cars daily traffic and has great foot traffic due to some of the businesses located next door.

Restaurant has shown solid growth since 2007 with sales averaging a $40,000 increase for the last 3 years and is on track to do the same in 2010 – around $415,000. Numbers are very healthy with 28% food cost and 25% payroll so far this year. Asking price is 2x what yearly owner benefit amount is projected to be for 2010. Very solid numbers during these difficulty economic times.

Owner operator hours are favorable and current owner is willing to stay on board post closing for employee training, etc. There are still many avenues of additional growth that could be pursued with this restaurant.

*Please note: SERIOUS PROSPECTS ONLY*

Thank You,
Greg Mahalick
Callander Commercial
616-459-8000

By Jonathan J. Siebers, Esq.*

It seems everyone is talking these days about “troubled” or “distressed” assets.  Owners of troubled assets often feel like they are cornered and without any decent options.  Some of these owners are correct, but not all of them.  Before sinking into a state of hopelessness, an owner of a troubled asset should do a comprehensive review to assess their situation and to determine what, if any, options they have.  They may be surprised that things are not as bad as they once seemed.

The first thing the troubled asset owner needs to consider is why the asset is troubled. Just as each commercial property is different, each troubled asset is different. Most notably, troubled assets differ in how they are troubled.  Some assets are troubled because they no longer cash flow, resulting in hardship for the owner in making debt, tax and insurance payments. Other assets are troubled because they have dropped in value below the ratio required to be maintained in the loan documents.  Still other assets are troubled not because there is something wrong with the asset itself, but because there is something wrong with the borrower or one or more guarantors.  To determine whether a troubled asset owner has any options, then, it is critical for the owner to determine what category of “troubled” they fit within.

Second, the troubled asset owner should review the type of debt they have with their lender and whether they have other loans with this or another lender that are impacted by the troubled asset.  With respect to the type of debt, is it non-recourse, partial recourse or fully recourse debt?  Further, does the owner have other loans with this lender with cross-default and cross-collateralization provisions?  If there are no cross-default provisions but you have other loans with this lender, how will a default in this debt affect your relationship with the lender? Obviously, the best-case scenario for a troubled asset owner is to have non-recourse debt and no other debt, but a troubled asset owner may have options even if they are not in that choice scenario.

Third, if the debt is recourse, the troubled asset owner should consider what type of guaranty was given and what other assets the owner owns.  Is the guaranty unlimited and continuing?  Is it pro rata?  Is it secured?  Is it signed by the owner’s spouse?  Does the owner own any other assets?  If so, are the other assets owned free and clear or are they collateral for some other loan?  Do the assets fall within a safe harbor that protects them from creditors?  Are the assets owned as tenants by the entireties with a spouse?  The answers to these questions can help the troubled asset owner determine the likelihood that the bank will pursue the owner personally.

Fourth, the troubled asset owner should read carefully all of the loan documents to determine whether there are any special provisions that either protect the borrower or protect the lender.  While most commercial loan documents are pretty similar, one should not assume that all default provisions and remedies provisions are created equally.

Finally, the troubled asset owner should at least consider speaking with a bankruptcy attorney.  The simple question to ponder with the bankruptcy attorney is whether the owner will fair better in bankruptcy than it would if it did not file.

If you own a troubled asset, the sooner you undertake the foregoing review, the sooner you will gain an understanding of your situation and your options.  The foregoing review contains many variables that can change the outcome, so don’t assume that your troubled asset is like that of your neighbor down the street, or that the solution to your problem is the same as the neighbor’s solution.  Finally, any review such as this should be undertaken with your real estate and legal advisors so that they can help you understand your situation and your options.

* Jon Siebers is a shareholder with the Grand Rapids law firm Smith Haughey Rice & Roegge and chairs the firm’s Real Estate and Construction Practice Group.  Jon can be reached for questions at jsiebers@shrr.com or (616) 458-5298.

The oldest Bait and Tackle Shop in Greater Grand Rapids is available for sale; it sits in an excellent location on 28th St. just east of Wilson Avenue.  Huge traffic counts, and potentially a great place for future development.  Perfect spot for a quick stop-off before hopping on the highway, or if you dare, fishing in the Grand River!  The property is currently listed for $275,000 $235,000; the building is approximately 2000 sq. ft.  Included in the asking price are the fixtures, inventory, and equipment.  There is a home attached to the store as well, which could be occupied by the owner or rented out for additional income.  Financial information is available with a signed confidentiality form, please feel free to contact clafleur@ccmichigan.com or dkarns@ccmichigan.com for any further information – or just click on the photo above to be taken to CPIX.net for the basic listing information.

This is the first time this property has been offered on the market in several years.  This property is extremely well equipped.  The building is 12,000 SF, zoned Industrial and situated on 9+ Acres with a large retention pond in place.  The building has many add-ons, new HVAC, heated floors, AC, rainroom (RV leak testing) and power to 440 available. Currently the front approximately 1/4 of the building is used as retail space, with large windows and easy access, even for larger vehicles or trailers.  Contact Chip LaFleur or Greg Mahalick to schedule a showing!

1143 Electric Avenue, Leighton Twp, MI

Are you looking to reduce your lease rates or overall overhead costs for running your business? This exceptional  (21,270 SF) industrial building is located just east of US-131 off 100th St. and is available for lease at a new lower rate of $3.00 psf.  One of the largest expenses a business will incur is the cost of rent and taxes, and in today’s economic climate many business owners are seeking ways to make a significant reduction in their overhead expenses.  Not only does the property offer a competitive lease rate, but Leighton Township offers some of the lowest property tax rates in the Grand Rapids area.

If you are looking to relocate, consolidate or start a new business, this property located in Leighton Township just south of M-6 and minutes off US – 131 may be ideal for you.  The building offers approximately 2,500 SF office space, 18,770 SF warehouse space, 2 overhead doors, 1 loading dock, sprinkling throughout, 24-32 ft ceiling heights, and a 15 ton crane w/ full length crane way.

Please don’t hesitate to call us at 616-459-8000 and ask for Pamela Collins or Jeanne LaSargeBono, and we would be happy to discuss the advantages of this property and your real estate needs!

First and foremost, I would like to address the Division Avenue Business Association and a special thanks to their President Tommy Brann- without their tiresome work Division Avenue would not be rebounded as significantly as it is.  Please visit their website for further information on membership and business opportunities at http://www.d-a-b-a.org

4044 Division Avenue is truly an amazing “before and after” story- what was once a forgotten vacancy seemed to be transformed overnight into one of Grand Rapids most esteemed custom paint and motorcycle shops- D.C. Customs.  Take a look at some of their creations here: http://dc-customsgr.com

Truly, the fastest closing Chip and I have ever been a part of (offer was signed and closed within 36hrs) D.C. Customs redefines the term haste.  Closed at the end of November and operational within just a couple of months, this business is truly a diamond in the rough and a beacon of light for other aspiring small business owners to follow.  Don’t believe me? Well, check out these before and after photos.

4044 Division Before

4044 Division After

Not yet satisfied, a deserted residential parcel located directly behind the shop (that was included in the sale & scheduled for demolition) is in the process of being built into a custom-bike-themed coffee shop with a lower level tattoo parlor!  Check out the photo below for an update on building progress as of last week!

In closing, if you are looking for a custom paint job (not just limited to bikes) or are in the market for a motorcycle purchase- you have to visit D.C. Customs first!  Stop in and ask for Dave- tell him Greg and Chip sent you.

As always, to our dedicated blog following and those just discovering us, feel free to follow Chip and me on Twitter for real-time industry updates and news:

@GregoryMahalick & @ChipLaFleur

Also, make sure you fan our page on Facebook!

Thanks again for visiting www.cregr.com and if you are conducting business in the Division Ave market place make sure to check out the Division Avenue Business Association ( http://www.d-a-b-a.org )

Chip LaFleur

Great to see some local municipalities taking initiative to get the real estate market moving!

The City of Kentwood has received a $200,000 EPA Brownfield Assessment Grant for Hazardous Substances.  The city can complete the following activities on eligible brownfield sites:

• Phase 1 and 2 Assessments
• Environmental Site Assessments (ESAs)
• Asbestos and Lead-based paint surveys
• Baseline Environmental Assessments
• Due Care evaluations/site reuse planning
• Brownfield Redevelopment planning and marketing

A business or property owner can request that the city undertake the assessments and other activities on their behalf.

Eligible sites are:

• Properties that are in the city of Kentwood and are contaminated or suspected of being contaminated by hazardous substances
• Properties that meet the eligibility criteria of the city
• Sites that meet the EPA eligibility requirements

Priority sites are:

• In a targeted area where there is a desire to encourage redevelopment, such as the Division Avenue corridor,  and older industrial areas, such as 32^nd Street
• Sites with high redevelopment potential
• Sites that present an imminent danger to human health
• Sites that will result in additional capital investment, create jobs, and retain existing jobs

Eligibility Criteria:

• An eligible site must be a suspected brownfield site
• Parties that are potentially liable for the contamination are not eligible to use the funds
• Proposed projects need to demonstrate the potential for capital investment and/or create retain jobs

The City of Grand Rapids, the City of Wyoming and the City of Kentwood have all received EPA Assessment grants, and have guidelines for use that are similar in each community.  For more information on Brownfield Redevelopment just give me a call or drop an email to clafleur@ccmichigan.com!