October 15, 2008
Reprinted from Crain’s Detroit Business.
With tough times behind the commercial real estate industry and tougher times ahead, winners of the 2008 Real Estate Excellence Awards said the key will be to find opportunities and work harder to get deals done. The awards were presented by Crain’s Detroit Business and the Grand Rapids Business Journal during the Urban Land Institute and the University of Michigan’s Real Estate Forum in Grand Rapids today.
Awards were given for projects on both the east and west sides of Michigan. The winners said knowing local markets can help investors find the deals in waiting, along with using all the incentives possible.
“You have to be creative right now to figure out how to put the equations together and get a deal to the finish line,” said Randall Allman, first vice president with the CB Richard Ellis office in Southfield who won the Lease of the Year Award. “Challenging times brings opportunity.”
A place to look for deals is in collaboration with universities said Marcel Burgler, a principal with Grand Rapids-based Prime Development Co. which won Development of the Year for the Studio One residential and retail project in Detroit. His project was comprised of a 99-year land lease from Wayne State University and his investment in the building was met with WSU’s investment of $10 million for a parking structure. “We did some deals with Ferris State (University) in Big Rapids, and my partners and I started asking each other, ‘Where else can we go?’ ” Burgler said. “Detroit has been vastly underserved as the national players have decided it’s not a place they want to go.”
Expect less new construction and more redevelopment, said Jon Rooks, an associate broker at Grand Rapids-based Parkland Properties who won the award for Redevelopment of the Year. “There will be more of an emphasis on adaptive reuse,” he said. “Seventy-five percent of all the condo closings (in Grand Rapids) have been at adaptive reuse projects. And the original buildings are still out there, available with decent roofs and walls for $5 to $10 per square foot.”
Obvious challenges now lie ahead in the finance markets said Robert Pliska, managing director of Sperry Van Ness/Property Investment Advisors L.L.C. of Birmingham. “There was $300 billion of conduit lending in the finance market in 2007, and almost all of that has been taken out of the market,” Pliska said. “So, we have to look at other opportunities with institutions and life companies.”
Overall, the market needs more optimism said Colin Kraay, vice president with the Grubb & Ellis/Paramount Commerce office in Grand Rapids. “Now is when fortunes are made,” said Kraay, part of the team which won the Sale of the Year Award. “Ask Warren Buffet. He cut some great deals in this environment. The same can happen for people in Michigan.”
Also winning awards were: John Ferchill, chairman and CEO of the Cleveland-based Ferchill Group for Redevelopment of the Year; Mike Gerard, senior managing director in the Southfield office of CB Richard Ellis for Overall Excellence Award; Stanley Wisinski III, chairman and CEO of the Grand Rapids-based Wisinski Group for Overall Excellence; and Celeste Adams and Michael Ellis of the Grand Rapids Art Museum for Development of the Year.