2016 a banner year for property sales
TRAVERSE CITY — Commercial space is in demand in Traverse City. Businesses seeking to locate here compete with local companies that are expanding.
“Now we’ve had a couple of solid years,” said Kevin Endres, owner of Three West commercial realty.
He said 2013, 2014 and 2015 all were good local commercial real estate sales years. But activity ramped up in 2016.
“Last year was this huge rocket,” he said.
Three West handles commercial properties in a geographic area that spans much of northern Michigan, from Petoskey to Grayling to Falmouth. But the Traverse City realty’s single office is nestled in the core of its sales activity.
“Traverse City is the hub of what’s going on in the region,” Endres said. “We were busy. Things were happening” in 2016.
Prices generally have been creeping higher in recent years as sales have accelerated. As a result, the selection of properties for sale shrank Potential buyers are competing for property.
The former Rentals Unlimited building, in front of Lowe’s on U.S. 31 South, sold in July. The property received three full-price offers, Endres said. The successful purchaser told Endres an AutoZone may take shape at the location.
New construction generally costs more than buying an existing structure and remodeling it. The region’s building trades labor shortage is contributing to costs and to delays in new construction. But as existing local inventory is depleted, new construction is sure to follow.
“Inventory is the name of the game,” said Endres. “New construction is in demand.”
Commercial structure sale prices in 2016 averaged just 7 percent below asking price, according to numbers Endres provided that were sourced from the Traverse City Association of Realtors. The difference between asking and selling price just a few years ago averaged 12 percent.
“Sellers are getting their value,” Endres said.
TAAR figures provided by Three West show that 77 commercial properties were sold in the area during 2016, 45 percent more than the 53 sold in 2015.
The per-square-foot sales price of the 34 industrial/warehouse properties sold in 2016 averaged $44, 22 percent higher than the average $36 per square foot for the 26 such properties sold in 2015. The average price for office/medical space rose 19 percent from $107 per square foot in 2015 to $127 per square foot in 2016.
Fourteen retail/restaurant property sales were reported in 2016, just 9 in 2015. The average price per square foot dropped from $138 in 2015 to $81 in 2016. Location and building condition factor heavily into price.
Northern Michigan’s 2016 surge in commercial real estate sales roughly follows a widespread upward trend, but local activity may be even stronger than the national figures.
“We have our own confidence level here” in northern Michigan, said Endres.