November 11, 2011
Commentary by Gary Marsh
While the media blazes away with heaps of negative news, from my view I see an economy that keeps working. If you read the daily stream of real estate news from reputable mainstream business media and trade publications, you are reading dozens of completed lease or sale transactions daily. Businesses need physical space from which to operate, whether they are running an office with 20 employees, a manufacturing plant in the Midwest or are shopkeepers at a retail location in Anywhere USA.
A lease or sale of real property represents serious commitments by the people signing on the dotted line that they have a viable business to run. Perhaps, they even have growing and highly profitable businesses. The media rarely reports these stories.
I am not Pollyannaish. The Greek debt threat is very real and could put the global economy on its rear end. And we all know that banks own more property than they certainly wish to.
But here is what I am seeing, and just this week from one commercial real estate organization – CORFAC International.
The Andover Company/CORFAC International (Seattle, WA) issued a press release announcing 15 completed lease transactions in a recent 30-day period. There were 12 industrial leases and three office leases totaling 123,000 square feet of space. Other than a deal with the United States Postal Service (an entity represented by Andover), unless you are from the region you would not recognize the names of the lessors and landlords in Andover’s list of transactions.
In Ft. Lauderdale, Florida, Ken Morris of Morris Southeast Group/CORFAC International reported three lease renewals with professional service firms in a Plantation building his firm manages. The largest lease was just over 2,000 square feet – not huge in the scheme of things, but three different businesses essentially said they are staying in business for another 60 months, or 48 months. Two of them are accounting firms and one is a professional staffing firm. They have clients to serve. They need a place to house their workforce. America keeps on working.
Dave Hazenfield with The Dickman Company/CORFAC International in Milwaukee, Wisconsin, called me after I asked about a sale transaction that his firm had reported in a press release. A local property of 23,100 square feet had traded, with the seller – a family partnership, selling after the patriarch of the family had passed away. This is a somewhat common occurrence in the industry. The inheritors of the property – the previous owner’s brother and daughter, didn’t want to manage commercial property. The buyer is a local, long-term investor who likes to hold property, lease it and earn income from his properties. This is called a marketplace – a motivated seller and interested buyer hooking up. This is business in America and it keeps repeating itself in every state in the union, every week.
Hazenfield also told me that the Milwaukee industrial commercial real estate market caught fire in the third quarter this year, with 1.2 million square feet of positive absorption in the three month period. Total positive absorption in the Milwaukee market for the first three quarters this is nearly 2.9 million square feet, and the vacancy rate is down to 7.5%, one of the lowest in the country. Rust belt my ear! But the press isn’t reporting this except maybe locally.
Dickman also reported an industrial building sale to a local charter school operator. With the challenges in the public school system, opportunity beckons for some. Charter schools are popping up all over the country and they need real estate, too.
What is going on in Wisconsin, like neighboring Detroit, is that small and enterprising business is carrying the day.
L. Mason Capitani/CORFAC International sent in a press release announcing a 46,000-square-foot industrial lease in Roseville, Michigan, on behalf of Aristo-Cote, a specialty manufacturer of polyurea coatings for customized packaging clients. Jason Capitani and Joe DePonio represented the firm in its lease while Capitani and Michael Grammatico represented the landlord. Aristo-Cote is taking on larger space than their previous location in Romeo, MI. Either the packaging industry for specialized products is in high demand or the lessee has established a successful niche – or both. Business is working for them and they need a physical plant.
The final deal example I will cite from this week is not only an indication that business is still working in America, but also a statement on the diversity of our economy.
King Industrial Realty Inc./CORFAC International brokers David Richardson of Bill Johnston represented TAPCO in a 60,420-square-foot lease that was both a consolidation and expansion in the Kennesaw/Acworth Industrial submarket of Atlanta, Georgia, for the company. Apparently business is good for the Georgia-based manufacturer and supplier of firearms and accessories, or the company would not have needed more real estate.