The overall market for commercial and industrial space appears to be recovering from the coronavirus, although the appetite for retail – one of the sectors hardest hit – remains soft, say real estate agents and brokers in the Mahoning and Shenango valleys.
Brokers and agents are generally upbeat about the market as sectors of the economy reopen.
“Despite everything that’s happened, the coming year should be good for us,” says Alan Friedkin, broker associate with Burgan Friedkin Commercial Group in Liberty Township. Both leasing and sales are strong, he says.
Friedkin says he’s been getting phone calls from people who want to list commercial properties and others interested in purchasing sites. He recently sold a property on Belmont Avenue next to Crabby Bob’s Crab Co. to a group that plans to open a restaurant there. And he recently listed the former West Fork Road House as well as the former Arthur Treacher’s.
Burgan Friedkin Commercial Group also has interested parties looking at an industrial site just off Interstate 80 and is working with a group searching for a location for a large distribution center. The activity is necessitating the hiring of additional commercial agents, Friedkin says.
Platz Realty Group, Canfield, is working on deals as far north as Ashtabula County and south into Columbiana County, with “significant activity” in Mahoning and Trumbull counties, says Don Thomas, managing partner. He also reports strong business in western Pennsylvania.
Business was good before the outbreak of the virus, then shut down about a month – “no phone calls, no emails, no inquiries,” Thomas says.
Today, sales are “extremely strong,” according to Thomas.
Leasing, depending on the segment, is strong and the markets for flex, warehouse and office space are good.
“There’s always negotiating – but for the most part it’s not a distressed market,” Thomas says. “The market seems to be strong.”
“Retail space is not so good,” he adds.
“Retail has been hit hard from all this, but there are certain segments that are still active,” affirms John Horvath, sales associate with the commercial division of Berkshire Hathaway HomeServices Northwood Realty Services in Poland.
“The market really slowed down for us quite a bit,” Horvath says. “Over the last three, four, five weeks, we’re seeing more activity start to come back.”
Interest rates have been resilient, he adds.
Horvath remains busy with site acquisition on behalf of the Dollar General chain, with a recent store opening in Lake Milton and an upcoming closing on a site in Columbiana County. He also has been busy with light industrial, he says.
“We’re seeing that starting to open up for us. There’s a lot of pent-up demand,” he continues. “We’re getting lots of calls on vacant ground from developers; so that market seems to be coming along for us.”
Jim Grantz, broker associate with Edward J. Lewis Inc. in Youngstown, reports he, too, is busy. Further, the people who are calling on commercial properties are ready to do business and not just kicking the tires on properties.
“If you go out and show something, odds are good that there’s a deal,” Grantz says. “The bounce back from the slowdown is going to be quick and the level of activity that we’re experiencing proves that.”
Interest in retail and office properties has been from national and local parties, he says, “a good sign for both segments of commerce.”
Grantz has signed several commercial leases and agreements recently, including the $1.05 million sale of the former Carney-McNicholas building on Victoria Road in Austintown to the owner of Butter Maid Bakery. The former General Electric plant site in Youngstown recently went under contract to be sold, as well as a property in Youngstown Commerce Park in North Jackson.
“There’s no particular area that’s a hotbed of activity here. We’re finalizing deals in western Pennsylvania, in the Youngstown market and in the Akron market,” Grantz says. Deals are closing for at or near the listed price, he adds.
Business had been strong last fall and winter, before the coronavirus outbreak slowed things down, Bob Collins, a commercial real estate agent with Berkshire Hathaway’s office in Hermitage, Pa.
As the economy reopens, he is seeing activity resume. Overall, properties are going for slightly below the market or appraised price.
Collins is seeing strong interest in small retail space in strip plazas and elsewhere. “We get people looking at things like gyms, hair salons, nail and tanning [shops] and some specialty clothing,” he says.
“We haven’t seen much pickup in the industrial part,” he adds.
Many of the calls Collins gets are from restaurant and bar owners looking to sell their businesses. Some of them might have been planning to retire but the pandemic prompted them to list their properties earlier than they might have, perhaps even a decade earlier than planned, he says.
“We have a few of them listed but you don’t know it,” he says. “We’re not going to put a sign out front.”
One obstacle in completing some of these sales is lack of a qualified buyer. There are individuals who know the restaurant business but lack the capital they need to open. “It’s so expensive to get these things up and running,” Collins says.
He adds there is much office space available, including medical offices.
“Here’s what worries me. People found out they don’t need those offices, as many employees worked from home for several weeks during the pandemic,” he says. “There’s going to be a lot of space out there.”
Friedkin and others speculate that low interest rates might be responsible in part for the activity.
“A lot of people are sitting on some cash and they want to invest it,” Friedkin says. “Maybe the economy is right with rates so low that people are willing to do things.”
Because of low interest rates, buyers are finding that their monthly loan payments are going to be lower than what they would be paying for a lease.
Because lenders can’t move quickly enough, many of the deals Grantz is seeing are cash deals, he says. “Because rates are really low and because of all these stimulus packages going on, they’re very busy with those transactions,” he says.
Among the transactions Grantz is working on are farm properties. He is putting the finishing touches on an agreement on a 60-acre site in North Lima where the buyer wants to build a house. Another farm deal he is working on in the Lake Milton area off a freeway interchange would involve a conversion to a commercial use.
Farm sales are being driven in part by the lack of housing stock in addition to the low interest rates, says Ron Black, a real estate agent with Berkshire Hathaway’s office in Salem.
“Baby boomers aren’t moving,” Black says. “They’re staying put; and I’m selling houses to a lot younger generation.”
Buyers are paying a premium for these farm properties. One 10-acre lot south of Lisbon he handled sold for $10,000 per acre. Oftentimes the farmland – particularly larger tracts – is sold via auction, he says.
Pictured: The former Carney McNicholas warehouse at 100 Victoria Road in Austintown was sold June 8 for $1.05 million.