Commercial activity shows buyers recognize good deals
Commercial real estate sales can be more closely tied to the job market and the economy than residential real estate sales. Businesses aren’t comfortable making large deals on properties unless they’re confident in their business plan and future prospects. So when a business signs on a contract on a large building with plans to expand, that can be a sign that the economy isn’t as sluggish as it once was.
Since it’s often accompanied by help wanted ads and additional hiring — as evidenced by the hiring events in September at the Mesa County Workforce Center for new retailers T.J. Maxx (opening soon at the former Borders location, 2464 Highway 6 & 50) and Tractor Supply Company, opening in November at 2455 Highway 6&50 — commercial real estate activity keeps local money flowing.
“The best sign for me this year was Tractor Supply taking over the former Office Depot,” said Dale Beede with Coldwell Banker Commercial Prime Properties. “They’re going to be great for Grand Junction.”
According to Beede, the Grand Junction area is still on the radar of other national retail companies who want to open locations in the Grand Valley.
While national retail companies consider all options and think about expanding in the Grand Valley, several local companies are taking advantage of low interest rates and the dwindling number of distressed commercial properties on the market, especially when they see deals that are too good to ignore.
“We weren’t looking (for investment property) at all,” said Pete Neuman with Leadership Circle, a real estate development company in Montrose. Leadership Circle, LLC owns Midlands Village, a manufactured home community in Grand Junction, as well as commercial real estate developments in Montrose and residential real estate developments in Montrose and Williston, ND.
Hard-working commercial agents aren’t deterred by buyers who aren’t looking to buy, so when Katie Worral with RE/MAX 4000 presented a vacant building and a viable tenant who planned on signing a long-term lease, it caught the attention of Neuman and Matt Miles, partners at Leadership Circle.
“We weren’t interested in the building without a tenant,” Neuman said. “In 2006, we might have been, but we had to have a signed lease before the lender would have funded the purchase.”
The building in question is the former Jobsite building, a property at 841 21 1/2 Road that was owned by the bank. The building has almost 70,000 square feet on more than five acres and had been vacant for several years. The tenant is GE Oil and Gas, which is currently in a 25,000-square foot building and has plans to turn its Grand Junction site into a distribution hub for the northwestern United States.
“We supply equipment to North Dakota, Alaska, Utah, Colorado, Wyoming, California, Montana” said Dan Hebert, the regional manager for GE Oil and Gas. The company supplies well head equipment and also refurbishes, assembles and reprograms equipment. Because the Grand Junction site will be a hub for activity happening across the northwest, it’s not dependent on local drilling activity. That made it a much more attractive deal to both the buyer and the bank.
Ford Construction has been refurbishing the building for GE Oil and Gas since July and hopes to finish by mid-November, averaging about 15 to 18 construction workers per day.
Once GE moves into the building, Hebert hopes to hire additional employees and bring the workforce from 25 to 50.
Other commercial brokers are getting equally creative when it comes to finding the right building for their buyers. Stacey Cook with Hill and Homes had been working with John Mcilveen with Teltech Communications for several months with no success. Although Teltech is headquartered in Eagle, Colo., it has a warehouse and distribution facility in Grand Junction and had recently received a contract from Sprint to refurbish cell phone sites across the country.
“We’ve gone from seven employees to 40 since September of 2011,” Mcilveen said. Although cell phones are small, the equipment that makes a cell phone work across remote locations is not. “Because of the size of the building we needed, there wasn’t a lot available around here. We looked at building (a new facility), but didn’t have time to wait that long.”
Rather than wait for something to come onto the market, Cook asked a few questions and found the right building at 2135 Main St. Then he had to convince the owner that he wanted to sell it. Fortunately for Teltech and the additional employees it will hire once the building has been retrofitted to Sprint’s requirements, Cook can be very convincing.
While no one thinks the level of commercial activity is robust, there are healthy signs.
“Users of space are looking for opportunities to help them grow their business,” said Worrall, who added that the large distressed commercial properties are getting absorbed by savvy businesses who know that low interest rates and low prices don’t last forever.