Home News Four Corners: Why Downtown Traverse City’s Most Iconic Buildings Are All Selling At The Same Time

Four Corners: Why Downtown Traverse City’s Most Iconic Buildings Are All Selling At The Same Time

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2022 feels like the beginning of a new chapter in downtown Traverse City. In addition to the impending riverfront redesign, plans for a roundabout, and the potential for new affordable housing within the city limits, Some of downtown’s most iconic buildings It’s the first time in generations to enter the market or change owners. ticker We sat down with Dan Stiebel of Coldwell Banker Commercial Schmidt Realtors, a real estate expert involved in many of the region’s largest commercial deals, to discuss what all the activity means for downtown’s future.

Ticker: Many downtown buildings appear to be on the market, including iconic spots like the Beadle Building and the Freemasonry Building. In the big picture, is there more commercial real estate activity downtown right now, or does it just look that way because many of the larger buildings are for sale?

Steebel: I think there is more activity on the sales side. What happened is that both downtown prices and demand for downtown space have skyrocketed in the last few years. Downtown is doing well and everyone wants to go there. Fifteen years ago, everyone wanted to go to the center of Front Street, he was only two blocks away. If you were a block or two away walk by him no traffic and the two main he was like an incubator until he reached one of the blocks. But then Bubba’s opened and Little Fleet opened. I think the Little Fleet really brought people to East Front Street and opened up the whole town. And now there are plenty of businesses on the West Front, too, with Barrio opening, Modern Bird and Lil Boe changing hands. Downtown as a whole is very strong, with the main block becoming more popular as the area expands.

I think what’s happening now is that many long-time building owners are seeing their values ​​go up and are thinking, ‘I’m not going to sell. It’s still a good investment! But then, for different reasons, different owners changed their minds. We definitely hit a high in the market and there was a pullback as interest rates went up. And I think in all aspects of real estate, everyone thought, ‘Will prices go down when interest rates go up? People didn’t want to miss the high market, so they had to wait another 10 to 15 years for the market to come back up. Especially if your goal is to retire within the next five to ten years. So I think a lot of people went through that thought process and decided it might be time to put the building on the market.

Ticker: Q1 and Q2 commercial sales data show both Traverse City commercial sales transactions and dollar value are up this year compared to past years, with average days in the market decreasing. indicates that there is Why is there additional interest in commercial real estate, and what about office space, given that many businesses are still in remote work mode?

Steebel: Investors see real estate as a good hedge against inflation. They see stock market portfolios fall, bond prices fall, and cryptocurrencies fall. Even precious metals, historically good hedges against inflation, are falling. But real estate is still on the rise. So I think it was a boon. And since residential real estate is more susceptible to higher interest rates than commercial real estate, commercial real estate has benefited from an increasing number of investors who see it as a safer place to have their money. As costs rise, existing buildings rise in value, so commercial buildings tend to either maintain their value or increase in value over time, especially in an inflationary market. Very strong.

Especially when it comes to office space, Traverse City still has a lot of open space. More activity is being seen, and more people are using larger offices. But there are still many offices, and I suspect some of them will be redeveloped and converted into housing. This option makes sense. There are too many offices and not enough housing. Other than the economy having to function, there’s no reason why many downtown office buildings can’t be converted to housing.

Second, small offices are currently the most popular choice. If he had a 10,000-square-foot office downtown, turning it into a single he office would be the best return on investment right now. There’s a lot of demand from people who work remotely but want to get out of the house and need a little something.

Ticker: What’s the inside scoop on the latest sale happening downtown?

Steebel: Your headline might be something like “Dan Stiebel has a deal on every corner of Front Street downtown.” This is kind of crazy because I get calls all the time from people wanting to buy downtown buildings.’ But now all these buildings are moving in unison. Masonic buildings are under contract, [the buyers] We are in the middle of due diligence.Beadle Building, Jack Lane [of Real Estate One] is for sale, but I just brought in a buyer and signed it into a contract. They are now beginning a due diligence process for the building. And the Grand Traverse Pie Company space on Park Street is a ground floor condominium unit that is also under contract. As such, none are officially for sale. They are all still for sale. But there are buyers lining up and I expect all three to be completed in the coming months. It has been released and is still available. So if anyone feels they’ve missed the boat and wants to buy one of the main downtown corners of Front Street, I still have one of them for sale.

The Ticker: What should locals expect from these buildings in the future?

Steebel: I think everything I’m working on is good. Everything locals want.borrowed [such as the Grand Traverse Pie Co. space] It remains leased to tenants there for as long as they want to stay. All the buyer is trying to do is generate income and keep tenants staying. All three buyers are locals who now have local businesses in Traverse. Masonic buyers are looking at the possibility of moving their businesses to the space one day, but in the meantime all those leases will be honored. I’ll just say I’ve heard that the owner of Mackinaw Brewing is considering retiring, so it’s possible someone will take over it, or it could become another restaurant.But in general, I don’t think you’ll see much change [in what these buildings are used for].

The Ticker: Earlier this year, Cherry Republic buy arcade building and turn it into their new headquarters. Could we see more downtown workhorses buying their own buildings? Does commercial real estate in particular look like an attractive investment?

Steebel: I think if you can find a building that someone is willing to sell and own your own place, it will give you long-term stability. Because you can stay there as long as you want. Historically, we’ve had many building owners who own their own buildings and do business downtown. That’s why they were able to stay in business. However, there are also quite a few landlords who prefer to own their own buildings downtown and continue to rent. Especially for landlords who have owned the building for some time, they can afford to offer very reasonable rates. On the other hand, if some of these buildings were toppled over, we would have no choice but to raise our rates. No more tax cap.

For example, a Masonic building has been owned by the family that currently owns it for over 50 years. Current owner taxes are $20,000 a year. If you sell it, you will earn over $100,000 a year. This is a plus for downtown Traverse City. Because all that money goes into the city coffers. However, it poses difficulties for the new owners and thus for all tenants in the building. Because landlords need to find ways to make up for that lost income. tenant. I think buyers and landlords take a lot of responsibility by buying buildings and driving prices up or evicting all tenants. Because unless the previous owner wants to sell the building for much less than it’s worth, [this issue with tax uncapping] It happens every time a building sells.

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