Commercial Real Estate Pros Anticipate Rebound
YOUNGSTOWN, Ohio — Bob Collins, a commercial real estate agent with Berkshire Hathaway Home Services in its Hermitage, Pa., office, has no doubts about prospects for the Bruno Fine Jewelers property, which he is marketing.
Listed at $1.45 million, features of the six-acre property near Mercer, Pa., include a picturesque gorge, its own mineral spring and a waterfall that has served as the backdrop for countless wedding and engagement photos.
Collins gets calls from all over the country about the property, which could be a good setting for a bed-and-breakfast, restaurant or event venue.
“It’s beautiful. It’s just awesome,” he remarks. “It’s just one of those properties the right person needs to have.”
For that property, as well as others on the market in the Mahoning and Shenango valleys, it’s a question of “when,” not “if,” although “when” remains unknown in an economy shocked by the COVID-19 virus.
Commercial real estate agents and brokers say they are still getting calls from potential buyers and lessors, and largely see the pause in activity as temporary. They remain confident business will swiftly ramp up when the emergency passes.
Collins was having his best year since he entered commercial real estate seven years go, but business began to slow down about a week or so into March, he reports.
Even so, he is still getting calls, showing properties and recently closed on a restaurant, although he doesn’t know how much interest remains in such sites for a while, given the restrictions on commercial activity in place in Pennsylvania.
“How about buying a restaurant and not being able to go ahead and open?” Collins asks.
He also deals with a lot of organizations that have boards that must approve any sales or purchases but can’t meet now.
In addition, he acknowledges some deals have been put on hold, including at the Barkeyville exit on Interstate 80, and a medical office building two physicians were looking at.
“Things were moving positively. We were seeing a lot of activity,” affirms Alan Friedkin, broker associate with Burgan Friedkin Commercial Group in Liberty Township. “In our lifetime we’ve never seen anything like this.”
Even though business is “a little bit on hold,” Friedkin reports he still takes calls from people who want to see properties.
He is working with retail giant Meijer on property adjacent to the site in Boardman Township where it plans to build its first store in the Mahoning Valley, and recently completed deals by the Eastwood Mall in Niles.
Friedkin also is working with developers on projects in the western part of Canfield and he foresees more industrial activity in the North Jackson area.
Jim Grantz, broker associate with Edward J. Lewis Inc. in Youngstown, says about 90% of his appointments have been canceled recently, but paperwork has been brisk.
“I’ve gotten four letters of intent for things that I had been working on,” he says. Those include two retail deals in Akron and western Pennsylvania, an industrial sale in Mahoning County and an office lease in Austintown.
Leasing activity hasn’t changed but there has been some “foot dragging” in investment sales, he reports.
“It’s not by the buyers. It’s by their lenders,” he says. “I don’t think deals are getting killed but we’re in the process of extending due diligence periods.”
Until recently, 2020 was shaping up to be a “banner year,” says Bill Kutlick, an agent with Platz Realty Group, Canfield. His company, Kutlick Realty, recently merged with Platz (See story on page 47).
“It’s been an extremely good year,” although recent events are going to mean a blip in business, Kutlick says. “We haven’t had any contracts terminated at this point.”
“Are we disappointed with what’s happened over the past few weeks?” asks Don Thomas. “Of course, but we see it as a short-term piece,” the managing partner at Platz Realty Group, Canfield answers himself.
Platz Realty is seeing a “significant uptick” in warehousing, as well as national retail, Thomas says. He recently closed on properties along U.S. Route 224 in Boardman for both Sheetz and Speedway.
In addition, he is working on projects in Lordstown – he couldn’t offer details but says they involve spinoffs from the TJX Companies, General Motors and Lordstown Motors Corp. projects – as well as in downtown Youngstown.
“Lordstown could look dramatically different in five years as a technology hub and a logistics hub. And the Mahoning Valley could look dramatically different with that,” he says.
Recent listings include a building on Victoria Road vacated when its tenant moved across the road into space that was triple its former size, and the former Lear Seating building across the road from the site of the proposed battery plant, Kutlick adds.
“It couldn’t be better positioned,” he says. “This is something where a manufacturing business doesn’t have to wait a year or two years to build it from the ground up.”
One sector of commercial real estate, retail, has changed dramatically over the past few years, Thomas says. Many retailers are going to smaller footprints because they are fed from a central location and no longer have warehouse space in the back of the store, he explains.
“You’re going to continue to see smaller-footprint retailers,” he says.
The real estate professionals are confident about prospects for a rapid rebound once the outbreak subsides and commerce is permitted to resume.
Collins says he expects people to feel as they do the first warm, sunny day after a hard winter. “People are going to be so happy to go out and eat in restaurants,” he says.
“We’ll get through it. We just have to think positive and go along with what the governor and the president are saying and what the experts are saying,” Friedkin says. “It’s a bump in the road, but we’ll come back.”
Business most definitely is affected in the short term, Grantz says, but he, too, expresses confidence in a rebound. “I would be surprised if things didn’t ramp up rather rapidly after this is over,” he says.
“We feel confident that [the market is] going to bounce back as quickly as it dropped right now as far as confidence,” Kutlick adds. “I firmly believe this is going to be a short-term situation for all of us.”
Pictured: The former Bruno Fine Jewelers, a picturesque property near Mercer, Pa., is listed for sale at $1.45 million.
Copyright 2020 The Business Journal, Youngstown, Ohio.