20 minute read
Tips and trends for 2020 commercial and residential real estate
TIPS AND TRENDS
Real estate in 2020
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BY MARY GAJDA
The real estate market can ebb and flow, but being in the know can help a great deal when you are considering buying or selling either residential or commercial properties. Arming yourself with the right real estate agent and plenty of knowledge will keep you one step ahead in your quest.
Greater Lansing Business Monthly spoke with Heather Driscoll, broker/owner at EXIT Realty Home Partners; Kellly Hude, Realtor with RE/MAX Real Estate Professionals; Jim Kost, real estate agent with Coldwell Banker Hubble Briarwood; and Lisa Kost, manager of commercial real estate for Coldwell Banker Hubbard Briarwood.
DO YOU HAVE A FORECAST FOR REAL ESTATE IN 2020 – EITHER COMMERCIAL, RESIDENTIAL OR BOTH?
DRISCOLL: A strong economy and employment combined with low mortgage rates will continue to support a robust housing market. Hude: As a residential specialist, my prediction will be a very strong early spring market, which will probably continue through the summer. As we are heading into an election year, I think things may slow down a tad starting in late September as we head into the aggressive political months.
JIM KOST: My forecast for 2020 is that the market should remain a seller’s market with low inventory, low interest rates and a presidential election. I feel home prices will rise due to supply and demand. We have lots of new employers and lots of new first-time buyers who are sick of paying rent in our affordable marketplace. We have baby boomers buying down and also purchasing condos.
LISA KOST: Commercial forecasting is consistent with the economy, in general, so growth is still expected for 2020. January and February were actually still good times to put commercial properties
Photo credit: Jena McSchane Jim Kost
Lisa Kost
on the market, which is often the times companies are looking in anticipation for summer or fall occupancy.
ARE THERE ANY NEW TRENDS OR CHANGES IN THE SELLING OR BUYING PROCESSES AS COMPARED TO THE PAST THAT WE MIGHT SEE IN 2020?
DRISCOLL: You’ll see iBuyer options like the ability to request a tour online and get confirmation. Trending back to suburbs (RISmedia) focus – Hip walkable communities. Kelly Hude
HUDE: This may be the last year for the strong sellers’ market. I predict things will start shifting as our inventory and supply/ demand gradually change near the end of 2020. I don’t believe it will be a drastic change as in the past, but eventually we will start shifting toward a buyers’ market.
JIM KOST: No new trends expected, but I feel sellers will recognize the importance of having a Realtor in a rising market to capture top dollar and the expertise in handling multiple offers.
LISA KOST: More and more buyers are finding properties through the internet, but commercial transactions can be complicated- even risky- so working with an experienced agent is still the best approach to buying and selling.
DO YOU HAVE ANY TIPS FOR BUYERS AND SELLERS OF BOTH COMMERCIAL AND RESIDENTIAL REAL ESTATE?
DRISCOLL: For residential, buyers need an experienced agent to work on their behalf. Due to low inventory we are seeing more multiple-offer scenarios. You need an agent who can proactively search for you – keeping you apprised of listed and nonlisted properties.
You want an expert negotiator; a firm advocate and someone knowledgeable about structural issues, the lending process; and an agent who is a strategic problem-solver.
Set a budget for repairs/updates and have an agent out to help evaluate and prioritize projects for best (return on investment). Staging is very beneficial as it helps place Heather Driscoll
a buyer in the home. Using your existing furniture works with a minimalist approach so you showcase space in each room. Pricing is key. The bracket that you’re in matters. You need to think like you’re a buyer who is searching online in $25,000 price points (i.e., $100-150). You want to be the best house in the bracket you’re in – in terms of square footage, updates, location and more.
HUDE: Try to jump on the market early this year. Don’t wait to buy or sell in May/ June. You will get caught up in the spring “flood.” You will have more competition either way if you wait. Get ahead of the game and plan to start your home selling/ buying before everyone else does.
JIM KOST: Buyers should get preapproved now for financing and start looking early to get the jump on the spring market.
LISA KOST: The best way to succeed in commercial real estate is by working with a commercial Realtor who can market your property across all platforms or search the entire market to find your perfect property. My husband is a residential Realtor, so we can cover everything, but he does not do commercial work for a reason – it is a very different “animal” that requires special skills.
Mary Gajda Mary Gajda a multimedia specialist at M3 Group. She is a wife, mom and photographer who loves music, Pinterest and all things chocolate.
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VISUAL BREAKDOWN VISUAL BREAKDOWN
Mortgage Rates on the Decline The government-controlled company Freddie Mac expects mortgage rates to remain low over the next two years, averaging 3.8% in 2020 and 2021. Its forecast indicates the housing market will continue to stand firm, with home sales increasing from 6 million in 2019 to 6.2 million and then to 6.3 million for 2020 and 2021, respectively. House price growth is expected to decelerate through 2021, with annual rates of 3.2%, 2.8% and 2.1% in 2019, 2020 and 2021, respectively.
Not for Sale Despite attractive interest rates, Realtor.com believes a lack of homes on the market in 2020 will drive down existing home sales by 1.8% to 5.23 million. Home prices are likely to decline in Chicago, Dallas, Las Vegas, Miami and San Francisco. The website believes top markets in 2020 will be found in Boise, Idaho; McAllen, Texas; Tucson, Arizona; Chattanooga, Tennessee; Columbia, South Carolina; Rochester, New York; Colorado Springs, Colorado; Winston-Salem, North Carolina; Charleston, South Carolina; and Memphis, Tennessee.
Out of the Price Range In a year-end report from real estate researchers at Attom Data Solutions, the average wage earner can’t afford to buy a home in 71% of the United States, which is an improvement from 73% in the third quarter and 75% a year earlier. With the national median home price at $257,000, homebuyers need a gross income of $67,647. However, the average annual wage in the nation is $58,214.
Retail on the Ropes The Motley Fool company Million Acres sees the continuation of a troubling trend. More than 9,000 retail stores are expected to have closed by the end of 2019. That follows 5,524 that shuttered in 2018 and 8,139 that closed in 2017. Retail closures are expected to continue in 2020 at a rate that outweighs new openings.
Avoiding the Mallpocalypse Axios predicts 2020 as the year of the mall makeover, with more nonretail destination options filling the anchor vacancies left by big-box department stores. Fitness, entertainment and services such as tattoo parlors that can’t be moved online are expected to help boost the vital signs for malls, which were once believed to be beyond saving from extinction.
Pumping the Brakes on Refinancing Refinance originations were expected to be $846 billion in 2019 before slowing to $650 billion in 2020 and $475 billion in 2021, according to Freddie Mac. Modest increases in home sales and house prices are predicted to boost purchase mortgage organizations for the foreseeable future.
TEAMWORK MAKES THE DREAM WORK Gillespie Group’s encouraging vision for Lansing
BY ALLISON SPOONER
Pat Gillespie is an eternal optimist.
When the founder and president of Gillespie Group hears of a business closing, his focus turns to what the land and the building could be instead of what it was. He views the fact that Lansing isn’t like Detroit or Grand Rapids as an advantage instead of a setback.
He observed that Lansing is growing more slowly than other cities, but he also pointed out that the area’s growth hasn’t stopped in the last decade, even when other cities stalled out.
Pat Gillespie speaks at the groundbreaking for BLOCK600
“It’s hard to complain about steady progress,” he said.
So, why is Gillespie so optimistic about Lansing’s potential when a lot of comments centering around the city tend to be negative? “It beats the other way,” he said. And, when you view the city through his eyes, it’s hard not to share in that optimism.
It seems Gillespie’s optimistic attitude started when he was a child growing up on Lansing’s east side. During his youth, he was enamored with the downtown area and loved visiting the Knapp’s Centre. Even though he never thought of his hometown as one that needed fixing, he always loved the idea of buying rental homes to improve. It was something he knew could really make a positive impact on a neighborhood.
Taking something old and making it new again was Gillespie’s first love within the real estate field, which may explain Gillespie Group’s passion for revitalization projects.
It also explains its monumental role in Lansing’s growth over the last decade.
TEAMWORK MAKES THE DREAM WORK
Gillespie’s vision includes that of his team. Where he goes, the team is on hand working in sync to bring projects to life.
“Early on, I learned that the vision I had for Gillespie Group could only go so far with what I know and can do by myself,” said Gillespie. “In order for those visions to become a reality, it became clear that I needed a team of exceptional people who’s unique abilities and passions surrounded the execution of a well laid out plan to truly be successful. What we are able to achieve today simply would not be possible without the entire team we have at GG.”
Gillespie’s team includes Vice President Rachel Michaud. A part of the team for nearly 22 years, Gillespie described Michaud as “the steady force that manages the vision from start to completion. She is the glue that holds things together at Gillespie Group, playing a crucial role in every aspect of the organization.”
and vison become a reality.
“Often, that means blazing trails in a whole new territory while navigating complexities that are sometimes uncertain and managing risks and expectations of our investors,” said Gillespie.
Director of Operations Jennifer Charette leads the largest group of team members within Gillespie Group with a focus on both residential and commercial management, as well as Human Resources.
Director of Marketing Ashley Brzenzinski communicates the vison of Gillespie Group’s projects, often introducing new concepts to the area.
“Ashley is passionate about our vision here at Gillespie. She works to deliver our message both internally and externally with a focus on progress and positive community impact.” Gillespie further noted that he feels it’s important that people know that they are here by choice. “We are thrilled to be able to develop and manage outside of the Lansing area, and have done so in many wonderful markets, but this will always be our home.” Gillespie said.
Jason Kildea, director of project and construction management, oversees making the dream a visual reality.
“Jason leads all things related to the construction, renovation and rehabilitation of our developments. He finds his passion by being the boots on the ground, if you will. As the Gillespie team member working in the trenches, he is charged with making sure our brand and vision are executed at every level of physical construction,” said Gillespie.
BIG NAMES SPUR SMALL PROJECTS
No matter how you view its progress, there are signs everywhere that Lansing is making dramatic strides forward. You can see those signs of life in the activity taking place not only in the city but across the region. Although it can test one’s patience, the constant construction is a sign of progress. The cranes, the new subdivisions and buildings popping up are all signs of the future.
“The whole region is growing,” said Gillespie. Left to right: Tricia Walthorn, Jason Kildea, Pat Gillespie (seated), Ashley Brzenzinksi, Rachel Michaud (seated) and Jennifer Charette.
Those cranes aren’t going anywhere anytime soon as big names make commitments to come to the Lansing area. That itself is a great sign.
“Companies like Meijer and Marriott do their homework,” Gillespie said of two major projects coming to the downtown area. “They’re taking notice and they’re deciding it’s time to be in Lansing. When the big players start taking a look like that, it means we’re onto something.
“These are the moments in which cities really start to change,” he added. The Gillespie Group team is now turning their optimistic eyes on the cities that seem to be “outgrowing” Lansing.
When Grand Rapids got the Medical Mile and its hotels and high-rises, that’s when the big things started happening. When the big developments come in, it drives the older buildings in smaller neighborhoods to be hipper, cooler and worth investing in, Gillespie said.
Big things come in and the locals bring back the old buildings and small neighborhoods to support the new developments.”
While a closing business may seem like a setback to many, to an eternal optimist and real estate professional, the bankruptcy of Sears means that a 14-acre piece of land on the highway, next to Michigan State University and across from a $300 million development is an opportunity to put something new and progressive there, something that really draws people to the area.
“Yes, a business is closing and that’s awful,” said Gillespie. “But, freeing up a piece of land of that size to develop on the Michigan Avenue corridor, opens the doors to great possibility. That may be one of the best pieces of land in Lansing and a lot of other cities.”
He and his team aren’t the only ones that thinks so. Gillespie Group is already getting calls from outside developers about the land.
Gillespie Group sees that area as the target for the next round of growth for the city. Gillespie and team think that in the
SAID PAT GILLESPIE, CHIEF VISIONARY, FOUNDER AND PRESIDENT OF GILLESPIE GROUP.
Pat Gillespie
next five years, the area from U.S. 127 to the MSU campus could be explosive.
BUILDING A PLACE OF PRIDE
There’s still much more growth to come, but the team also sees the growth we’ve already achieved.
“We hear a lot of outsiders come in, and the ones that haven’t been here are pleasantly surprised. The ones we like the most are the people that have left and come back after five or seven years; those are the best barometer. They saw what it was, and when they say, ‘I can’t believe how much it’s changed,’ those are the comments that let you see you’re making a difference.”
Gillespie Group wants current residents to have that same sense of awe. Their ultimate vision for Lansing doesn’t focus on a specific a dollar amount for developments or a specific number of new buildings. It centers around an overall experience.
Gillespie Group has contributed a lot to Lansing’s growth. With his team, Gillespie knows his ultimate vision is possible: “They’re all entwined in the community. The whole team has
a passion for making the city and the community better. They take pride in it.”
The pride Gillespie has in his team shows. The staff genuinely enjoys working together. They celebrate the wins and play hard frequently as a team.
“We pride ourselves on professional growth of teammates and promoting within,” said Gillespie.
Whatever the formula, it’s working for Gillespie Group.
JOIN GREATER LANSING BUSINESS MONTHLY as they present the 26th Annual Entrepreneurial Awards Ceremony
WEDNESDAY, APRIL 1, 2020 Cocktail hour 5 p.m. - 6 p.m. Awards program at 6:30 p.m. Lansing Center, 333 E Michigan Ave., Lansing MI 48933
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Nathaniel Eyde
YOUR COMMERCIAL REAL ESTATE CHECKLIST
A guide to due diligence for businesses on the move
BY ADAM LANSDELL
If you’re a business owner, you’re certain to encounter one or both of the following milestones: selecting your business’s first commercial location and deciding where to transition once you’ve outgrown your existing space. One is a hopeful sign of the amazing things to come for your new business and the other is a benchmark of progress and growth that signifies a need for change.
Delving into the world of commercial real estate can be daunting. There are seemingly endless things to consider – and your due diligence is required when selecting a property for your business.
“When contemplating site selection, space planning or anything related to commercial real estate strategy, a business owner would
be greatly served by making a checklist,” said Nathaniel Eyde, member of The Eyde Co. “That checklist, however, is much less of a to-do list and much more of a statement of the core values of the business.”
So, where do you begin? What’s the best location? How much will it cost? What features are a necessity?
If you’re struggling to answer those questions or uncertain what to place on your checklist, Greater Lansing Business Monthly is here to help you navigate selecting and purchasing or renting your next location.
IDENTIFY YOUR NEEDS
this question: What exactly do I need in order to succeed in this business?
“With some businesses, it’s very simple, such as ‘I have a trucking company, so I need to be near a freeway,’” said Eyde. “With others, it’s more complex. ‘Should I be downtown or in the suburbs?’ ‘Do I really need four parking spaces per 1,000 square feet of office space?’ The best thing a business owner can do is to start with their own most major intentions or needs, then work down from there.”
BUY OR RENT
When determining whether to buy or rent, it’s important that you have a clear understanding of your business’s financial standing. As a business owner, it’s up to
you to determine which is best for your organization’s future. Buying commercial property has a larger upfront cost and typically requires a more thorough vetting process; whereas renting exchanges property management and lower upfront costs for what will likely be a higher cost over an extended period of time.
SEEK PROFESSIONAL GUIDANCE
While the decision remains in your hands, a little help from someone familiar with commercial properties is a welcome asset. According to Amy Richter-Perkins, senior associate and retail adviser for Martin Commercial Properties, you may want to talk to your certified public accountant about the benefits and ramifications of purchasing versus leasing a building or space for your business. Or you may work with a commercial property manager directly to see which of his or her available properties would serve as good fit for your business.
Once the core values are identified, then the time comes to consult professionals and partners. In the commercial real estate game, there are several resources when it comes to site selection.
COMMERCIAL REAL ESTATE OWNERS
“Often, a business owner will elect to work directly with an owner of a property or properties,” said Eyde. “This approach has its own advantages in that the business owner can gain a more granular knowledge of a specific building or space, and that owner can have the benefit of a clear and direct communication between two principals without the intermediary.”
REAL ESTATE AGENTS
“Hire a real estate agent to represent you. While any agent licensed in the state of Michigan can assist you, it is recommended that you work with a broker specializing in commercial real estate in the area you are looking in” said Richter-Perkins. “If you don’t know an agent, you can ask for recommendations from municipal officials, your lender or other business professionals, or even perform a quick Google search to find an agent in your area.” best possible purchase price and terms,” said Richter-Perkins. “They’ll also ensure that your due diligence period is sufficient to investigate all necessary aspects to determine if the property is suited for your use, which may include performing required environmental inspections, obtaining lender required surveys and appraisals, receiving municipality approvals, and evaluation of improvement/ construction costs for your intended use.”
LIMITATIONS AND RULES/ REGULATIONS
Knowing the lay of the land is valuable information for selecting a commercial destination, especially if you’re moving into a municipality where you’ve had limited interactions. Each municipality has its own set of rules and regulations regarding property management, zoning and more. These details could limit the function and processes of your business or present new obstacles if selecting to purchase a property that may need to be modified for adherence. Vetting each property with a working knowledge of the municipality could save you from major unanticipated costs and fines down the road.
THIRD-PARTY COMMERCIAL BROKERAGES
Brokers play a unique role in the process and, in most cases, it’s best to have one available to assist with the negotiation and acquisition process. Brokers can keep you on track and help ensure you’ve followed your checklist to a T.
“A commercial broker will help guide you through the process, will help negotiate the FEATURE
Throughout your quest for a new commercial property, be sure to ask questions, seek out professional advice and do whatever it takes to be certain you’ve done your due diligence. The key to success lies within your approach. Creating a clearly defined set of goals, determining your financial standing and considering necessary personnel for involvement will place you on the right track.
“The key to a successful site search is having clear goals and intentions,” said Eyde. “You must then select a service provider who will listen to and process that and follow up with question after question and answer after answer that leads to your fulfillment of those values and, ultimately, the space to do business that is right for you.”
Adam Lansdell is a Grand Valley State University alumnus, and currently a communications specialist with M3 Group of Lansing. With a passion for all things creative it comes as no surprise that he’s also a musician, movie buff and graphic designer. Lansdell spends his down time biking and spending too much of his personal income on concert tickets or vinyl records.
