Member Story: Three West Sets the Pace for Commercial Real Estate
TRAVERSE CITY – Rising and falling cycles are a fact of life in most business sectors – especially ones that involve real estate.
Northern Michigan’s real estate market is enjoying a steady surge in property sales and values since the Great Recession bottomed out nine years ago, led by rising home sales and prices. More than 3,100 residential properties were sold in the 5-county Grand Traverse region in 2018 totaling more than $870 million, according to sales data compiled by the Traverse Area Association of Realtors.
Commercial real estate sales are also experiencing a healthy rebound in the post-recession era, according to industry experts. Mark Eckhoff, a Senior Associate with the Three West LLC commercial real estate firm in Traverse City, said that while the commercial real estate sector traditionally lags behind the residential market in terms of growth, the region’s commercial real estate market continues to build momentum.
“The demand for commercial real estate is strong right now,” Eckhoff said. “There are a lot more buyers than there are sellers right now, and frankly that’s a good situation.”
Several factors have played into the tight commercial real estate market in the Grand Traverse area, Eckhoff said. The recession put a significant damper on speculative development, and tighter lending regulations in its aftermath requires developers to have significant portions of their projects leased or sold before they are financed.
“There are not a lot of new buildings and leased space that have come on the market,” he said.
Changes in the construction industry are another factor. The recession forced many construction workers – and companies – out of the business. Even as the commercial real estate market has regained its momentum, the construction industry is still gearing up to meet the demand and lacking in skilled tradesmen, carpenters, masons and others. Those labor shortages are leading to longer lead times to plan and build commercial projects, and higher prices for the finished products.
But the labor force is gradually catching up with market demand, he said, evidenced by a surge of new development and commercial property upgrades and renovations going on around Traverse City. Eckhoff said it’s a trend that he doesn’t see slowing down anytime soon. With low unemployment rates across the area and the Grand Traverse region’s continued growth in non-tourism sectors like health care and technology, Eckhoff is confident that the local commercial real estate market will continue to trend upward.
“I think people realize that this is as much a business center as it is a tourist destination,” Eckhoff said. “I just don’t see any big dark clouds on the horizon right now.”
While the local real estate market is considered sound and stable, Eckhoff said how the industry operates continues to rapidly evolve thanks to digital technology and the internet. Today’s technology explosion allows commercial buyers and sellers to access a wealth of information about properties including nearby traffic counts, populations, income levels of adjacent neighborhoods and more. Virtual property tours, drone technology and digital floor plans can allows buyers to inspect all aspects of a property without a physical visit. Other new technologies can help buyers and sellers close a transaction from virtually any location, he said.
“Pretty much everything you need to get done can get done on line,” he said.
But all the technology upgrades don’t supplant the need for experienced real estate professionals, Eckhoff said. Three West operates with a multi-faceted team from the engineering, design, financial and small business fields to help them offer services beyond traditional buying and selling that includes appraisals, leasing, property management and other services.
“There’s a lot of finance involved in real estate,” said Eckhoff, who worked as a local bank president before joining Three West. “We have a lot of people with varied backgrounds here and that helps a lot…we try and take a team approach to everything.”
-By Bill O’Brien