Detroit – Matching Vacant Space and a Business

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Business, Commercial Real Estate, Detroit, Entrepreneurs, Grants

In 2015, Motor City Match provided $500,000 in matching grants; connecting business owners with property owners. Property owners with vacant space looking for tenants and entrepreneurs looking for space in Detroit may look to find help through this potentially viable option.

Grant Applications for Business Owners and Building Owners in Round 3 is currently open and will close January 1st.

In the previous round, 10 businesses received a share of the $500,000 Grant to start or expand a business plus 87 businesses received assistance in planning or guidance to get their businesses started.

For more information and to submit an application go to www.motorcitymatch.com.

The Detroit Economic Growth Corporation, a private, non-profit organization, one of the partners in Motor City Match, has a lot of resources to help companies and businesses arrive and thrive in Detroit.

 

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Downtown Condos in Demand Across the Country

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Commercial Real Estate, Downtown Condos, Office Space

Downtown Ann Arbor condo developments are booming. Urban living is more desirable than ever all across the country. A recent NPR broadcast reports larger cities, that were once ghost towns on the weekends, are emerging as the new places that Millennials want to live and developers are altering their mindset from office developments to walkable residential community.

Some cities are turning vacant floors in office buildings or total office buildings into higher-end residential condos or apartments. Detroit, Michigan, Wilke-Barre, Pennsylvania, Cleveland, Ohio, and Milwaukee, Wisconsin have all had residential conversions and are experiencing an upturn in downtown living.

Detroit has numerous companies that have moved from the suburbs to downtown.

Office markets are improving, due in part to conversions pulling office space out of the market.

The largest age group living in cities is 25-34 followed by Baby Boomers who are finding it increasingly more attractive to live “downtown”.

Source: Crain’s Detroit

Source: Urban Milwaukee

Source: Cleveland.com

Source: Citizens Voice

 

We’re Still Talking about Millennials…

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Commercial Real Estate, Marketing, Millennials, Trends

And we will be for the foreseeable future. In order to market commercial real estate to Millennials, the 20-34 year age group, you have to understand them.

A good place to start is the government report, 15 Economic Facts about Millennials by The Council of Economic Advisers, issued late last year. Some facts stated are:

• 15% of that age group were born in a foreign country
• They are technologically connected
• A study found half of those surveyed expressed interest in starting a business
• They are a third of the labor force
• They stay at early-career jobs longer
• Women have more labor market equality
• Millennials get married later
• They are less likely to be homeowners
• They are more likely to live in urban areas

Millennial Nicole Weinburger gives her perspective in a National Real Estate Investor article. Some of her key points are:  You have to keep up with technology to close sales; millennials will demand more information; video tours of commercial real estate listings will become more prominent; online leads will outpace referrals. Ms. Weinburger writes: “Millennials that have started to build up some equity and need to know with whom to invest their new, hard-earned money……Millennials who are first generation investors that don’t know who to trust will immediately turn to the internet as their first source.”

Photo:  Death to the Stock Photo

Work-Life Integration

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Business, Commercial Real Estate, Labor force, Startups

Work-life balance is now about work-life integration.

Startups are currently looking for spaces and  buildings where their workers can live and work.  Co-living, or group living, with a small personal space and large communal spaces for living and working.

It’s not a 9 to 5 workday, it’s 24 hour accessibility for hours that work best for work, rest or play.

Both shared and independent office space are in high demand. Freelance workers, independent contractors, and the self-employed are estimated to be 33% of the work force and may grow to 50% by the end of this decade, certainly an opportunity for landlords to be creative.

Source: Buzzfeed

Source: Bizshift-Trends

Photo: Death to the Stock Photo

Commercial High-Rent Blight

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Blight, Commercial Real Estate, Detroit, Downtown Ann Arbor, Retail Leasing

Recently an article in The New Yorker explained high-rent blight in the West Village area. Rising properties values allow landlords to justify raising rents on commercial properties often pricing long-term tenants out of the market. This has resulted tenants being forced to close their business or having to move. Many storefronts have been closed for a long time, as landlords wait for higher paying tenants, often whom are national chains.

New York City is not the only place that high commercial rents start to undermine the unique character that makes areas of a city appealing to shop and visit. When too many national chains move in, it reduces an area’s special attributes and hurts the small businesses that have created the charm and character in the first place.

Ann Arbor’s State Street retail district, adjacent to the University of Michigan’s central campus, recently saw two restaurants closing with claims of “high rent” as a factor in their decisions.

One city is finding a way to deal with empty storefronts. In 2011 a group of people in Minneapolis came together to develop a community real estate cooperative. Northeast Investment Cooperative buys and develops real estate. They have bought, sold, and renovated buildings in an area that was once empty storefronts. The area is now thriving with several businesses enhancing the neighborhood.

To reduce blight in Detroit a task force was created in 2013 called Detroit Blight Removal Task Force. They have been targeting residential neighborhoods first; starting with those that are most populated and have the fewest abandoned homes. The city’s goal is to tear down 200 houses a week.  Commercial blight will be more challenging as there are more than 5,400 commercial, civic and church properties on the removal list.

Source: MLive.com

Source: MLive.com

Source: Crosscut.com

Source: Detroit Free Press

Source: MLive.com

Commercial Real Estate Outlook and Portfolio Asset

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Commercial Real Estate, Commercial Real Estate Market Outlook, Institutional Investors

According to the NAR’s Commercial Connection, Research Report, the Commercial Real Estate market is looking positive for the rest of the year. Net absorption is expected to increase for all property types with the exception of apartment markets where there is an increased supply. New commercial construction will also grow albeit at a slower rate.

Institutional investment companies once considered Commercial Real Estate an alternative investment, not anymore. It is now the fourth institutional asset along with the traditional three asset classes of stocks, bonds and cash.

Development Magazine of the NAIOP explores this in their Spring 2015 issue. They state that Commercial Real Estate represents nearly 10 percent of a portfolio for institutional investors.

Real Estate provides portfolio diversification and can be an inflation hedge and offer competitive returns.

Office Work Space – Open Reigns

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Commercial Real Estate, Millennials, Office Buildings

For several years the square footage of workers private office space has been getting smaller. The trend is toward open concept work areas verses individual offices and cubicles. In those companies that still use office cubicles, workers find these shrinking, as well.

As technology is increasingly mobile, it effects the way we work and the spaces we work in. We are always connected with each other.  We can (and do) work anywhere.  The open concept work space is an extension of that.

Open office floor plans (ideally):

• Save money
• Encourage worker collaboration
• Promote creativity
• Increase productivity
• Attract younger talent

Some of the drawbacks can be: distraction, noise, lack of personal space and overhearing workers who talk too loud on the phone.

Nevertheless, traditional offices are on the way out and the open concept use will continue to grow.

Source: The New York Times

Source: Newtimes.com

Source: Entrepreneur

Source: Los Angeles Times

Source: Quartz

Bottom photo: DeathtoStockPhotos

 

Buying or Selling a Business

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Ann Arbor Businesses, Business Resources, Buying Businesses, Commercial Real Estate

Reinhart Commercial agent, Jay Houghton, specializes in selling businesses. Some points to consider from his experience:

• Most businesses don’t have real estate and are on leased property
• The top two reasons owners want to sell are burn-out; which may occur during the first 5-7 yrs of the business, or retirement
• Businesses on average take six months to sell and it may take another 60 days to complete due diligence and paperwork
• Every business’s worth is based on it’s individual characteristics like assets, location, earnings, revenue, etc. There is no set magic formula to determine worth

The government’s Small Business Administration’s website has information about buying a business.

Another good resource is Richard Parker’s website and book, How to Buy a Good Business at a Great Price, these are guides for buying an Online, Retail, Restaurant, Gas Station business and more.

Jay has a very profitable Burger Restaurant and Bar listed for sale which is located adjacent to the University of Michigan’s main campus in the heart of student housing. A rare opportunity to purchase a business in this location with a Class C Liquor license. This is a busy student hangout. Owner is retiring.

Urban Land Institute’s Emerging Trends in Real Estate 2015 Report

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Cities, Commercial Real Estate, Real Estate Trends

The Urban Land Institute and PwC (PricewaterhouseCoopers) have published their Emerging Trends in Real Estate 2015 forecast report.

This is a lengthy report but worthwhile to peruse.

Some points in “Chapter 1: Sustaining Momentum but Taking Nothing for Granted” are:

• Job growth will be in those cities that have an activity in the evening, the live-work-play experience
• During the next seven years watch whether millennials stay in urban centers or move to the suburbs
• Boomers actually set the trend of moving to urban areas
• Medical office use strengthening
• US labor force may face a worker shortage
• Technology is pushing the change of how space is used; focus on tech and media companies to lease office space, retailers are using the internet to drive consumers into stores
• US is not investing in its infrastructure, which will be a problem for real estate if it continue; public/private partnerships may help

“Chapter 2: Real Estate Capital Flows” indicates that for 2015 it may be better to be a seller than a buyer.

A few points in “Chapter 3: Markets to Watch”

• You have to pick the right market that will be sustainable
• Crowdsourcing is a movement to raise capital for real estate which may be subject to regulation in the future
• Equity and debt investors are moving ahead, carefully
• Capital will continue to flow in more markets in 2015
• Dollars invested in tertiary markets continue to grow
• Due to rising labor costs overseas, US manufacturing is coming back

“Chapter 4: Property Type Outlook”, provides an in-depth look at these property types: Industrial, Hotels, Apartments, Retail, Offices, & Housing.

Invest and Walk in Detroit

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Commercial Real Estate, Detroit, Investment, Walkable Downtowns

George Washington University Center for Real Estate and Urban Analysis recently released a report: Ranking Walkable Urbanism in America’s Largest Metros. While Detroit ranks 22nd out of 30 for metro areas, there is hope. Detroit ranked 8th out of 30 for cities that are developing urban walkable places. The authors see a permanent shift developing from the importance of drivebility in suburbs of metropolitan cities towards walkabliity in the city itself. If you drive in from the outskirts, walk in the city. A lightrail line will make that easier, connecting downtown, midtown and New Center.

Dan Gilbert, owner of Quicken Loans, owns nine million square feet of real estate in Detroit. He believes in Detroit and others are starting too also. Business are popping up, after years of Detroiters shopping in the suburbs, there is opportunity to keep those dollars in Detroit. Investors and entrepreneurs are rebuilding the city. Go to town, take a walk by the river, go buy something, a meal, a hat, a building, a house…  

Source: M-Live

Source: New York Times