Ground breaking on Main St Mishawaka

Construction has finally begun at the site along Main St in Mishawaka adjacent to Lake City Bank and Meijer.  Plans for a multi-unit retail center were announced in early 2015, long enough ago that many may have forgot about the project.

The original announcement was for a 4 tenant retail building that would be anchored by Potbelly and Qdoba restaurants.  Both restaurants are new to our market, though the first Qdoba opened a few months ago at the Shoppes on 6 in Elkhart.  The owners of the property were unable to be reached to confirm both tenants or any other potential retailers.

Rib Shack in Granger

The Rib Shack is now gone.  The site on which this locally famous restaurant formerly resided shall become additional parking for the adjacent medical practice.

It has been a while since we have seen new developments in the Granger area.  Within a small area, this ‘downtown’ portion of Granger has many businesses serving the local population and those traveling along SR 23.  Banks, a pharmacy, a grocery store, restaurants, a handful of bars, an auto dealer, medical practices and more.  There is even a farmers market.  There is an obvious demand for certain businesses, but what do the residents of east Granger want next and what will they support?

There are a couple properties with homes for sale nearby that require demolition to convert to commercial use.  There is only one small vacant parcel next to the former Rib Shack that is for sale and we look for what the demand is in the area for new construction.  Is there a local bank we need that isn’t here?  I would like your ideas!

New Healy Group Building

Healy Group, your new building around the loop on Generations Dr is looking good!

Why should you use a Commercial Broker to lease your office?

After all, leasing an office space or any space for your business seems relatively easy.  Identify the building you like, get the information on the lease rate, decide when you can move in and then sign the landlord’s lease.  Perhaps you would even be able to negotiate a better lease rate than the one advertised by the landlord and save money on rental payments.  So if it’s that easy, why do we need a commercial broker?

There are a few benefits that enlisting the services of a commercial broker will add to the transaction.

1. Identifying the right office

A good commercial office broker will not only take the time to understand your current and future space and location needs, but they are aware of all alternatives in the market and some of those yet to be available.  Brokers with experience can provide cost savings options to reconfigure space, potentially making due with less.

2. Further rent savings

Commercial brokers have a good understanding of a landlord’s costs and bottom line.  They know comparable lease deals that the market is demanding, what the leasing activity is like and how to leverage tenant strengths to negotiate a better lease rate.

3. Handle all lease negotiations

The future relationship between a landlord and a tenant is important and best if it is on good terms.  A broker acts as an independent party and can insulate the tenant from any negative emotions that could arise during negotiations.  A good broker will work to get the best deal for the tenant, knowing where it will likely end up and preserving the relationship.  A broker will also simultaneously get lease proposals from multiple landlords, essentially creating a bidding war and giving the tenant options to consider.

4. Review the lease document with careful attention to tenant’s rights and responsibilities

Landlords often shift maintenance responsibilities on to the tenant without the tenant even realizing it.  A broker will ensure that the tenant has rights should a landlord default on various services they are responsible for and that a reasonable cure period is in place for default by either party.

5. Add to tenant’s value with additional terms

Besides the rental rate and term length, there are many items that should be negotiated and can add immense value to the tenant.  Some of these include tenant improvement allowances, parking, first right of refusal, renewal terms, lease assignments, expansion rights and more.

6. Time

A broker devotes his time to working on real estate and leases.  Business owners have their business to run and should devote their time to that business.  Brokers will handle all the paperwork and negotiations and ultimately speed up the process of signing new leases.

There are various reasons to use a commercial real estate broker for your lease, whether it be a new lease or a renewal, an office space, or a retail or industrial space.  A broker’s service is generally at no cost to the tenant but will add value in time, money and final destination of the business.

Pinnacle Athletic Club in Mishawaka closing its doors

Another athletic club in the Mishawaka area is closing its doors.  Earlier this year Fitness USA in South Bend announced its closing which followed the closing of its Mishawaka location.  While these fitness centers have closed, the market has seen an increase in other business models.  Any Time Fitness, Charter Fitness and Planet Fitness have all entered the market recently, with lower cost for membership and a different level of service.  As with many businesses, strategies and business models change according to the wants of the consumer i.e. lower fees and flexible schedules.

WNDU reports on the recent closing announcement at the link below.

http://www.wndu.com/home/headlines/Pinnacle-Athletic-Club-closing-it-doors-280679232.html

Local Supermarket trends

In June of this year I wrote a short article regarding many supermarkets chains shifting to smaller store footprints.  Our market to this point had not seen any of these smaller stores.  Yesterday, Martin’s Supermarket announced it will open a Martin’s Express on College Ave in Goshen.  This smaller format store is the first of its kind for Martin’s.  At 26,000sf the store is 40% less than it’s typical store, according to  Martin’s Marketing Director Amy Simeri-McClellan.

Goshen is good market to open the company’s first express store.  The relatively small population makes it attractive to make a smaller investment in overhead.  Smaller specialty stores appeal to the millennial generation and Goshen has a younger median age for example than that of Mishawaka.  The store location will be proximal to Goshen College, serving and ideal target market.

This new Martin’s store falls right in line with new supermarket trends and we may potentially see more in the future.  Where these stores may be will depend not only on market demographics but availability of right sized buildings and distance from existing stores.

Source: http://www.martins-supermarkets.com/wp-content/uploads/2011/07/Martins-to-open-new-Express-store-concept-in-Goshen.pdf

Downtown Elkhart dining

I have been spending more time lately in downtown Elkhart, meeting for lunch or sometimes just driving through taking note of activity. On a recent visit, I was meeting with a downtown building owner to discuss the potential sale of her building.  I was downtown early and it was a beautiful day outside so I decided to walk a couple blocks and look for a quick bite to eat.  I was about 12:40pm when I stepped into the Pumpernickel Pretzel Bakery at 500 S Main St.  Being my first time in the café, I discovered a cute and friendly café with a selection of sandwiches and soups. But what I was struck by was the fact that my coming in had doubled Pumpernickel’s business at that time.  I ordered a bowl of homemade soup and for the 10 minutes I stayed in the café to eat my soup, the other diner and I remained the only two customers.  Pumpernickel also runs a catering business and has a banquet room upstairs, but according to the staff that day, lunch business is sporadic.

With still some time before my appointment, I decided to walk south and check out the Cubby Bear Pizza.  I had heard about it several times, driven by in, but had not yet visited.  I stepped in just before 1pm and was greeted by the very friendly manager.  I told her I was just checking the place out and she happily showed me the dining and the bar area.  We chatted about business and I noted that there was only one table of guests in the dining area, albeit a group of 10.  The manager admitted lunch was definitely a struggle.  She explained the lack of lunch business as, “that’s Elkhart”.  I really wasn’t sure what that meant, but I know that most of the economic strength of the city lies in the RV manufacturers in the industrial areas of the city.

In the previous couple weeks I had a business lunch a couple times at the 523 Tap and Grill.  Lunch each time was good, but it was clear by the crowd they could be doing more business.  I really began to wonder, where do the employees that work downtown eat their lunch?  Do they bring their lunch from home or do they spread out further from the 500 block and visit other establishments.  Walking or driving down Main St even on a beautiful day, there is seldom seen the hustle and bustle of pedestrians.  There are several large businesses downtown including Patrick Industries, Key Bank, Barnes & Thornburg, Chase Bank and government offices, but where are the people?

Downtown Elkhart does have other restaurants and they are spread out over a 5-7 block radius including Michael’s Italian on 6^th Street and McCarthy’s on Nibco Parkway.  The density of the working population is not great, even compared to Elkhart’s neighbor to the west, South Bend.  The Chase Building, one of the largest multitenant buildings in Elkhart, is only four floors.  South Bend maintains a fairly lively lunch crowd in its downtown, but there are an estimated 20,000 employees in that downtown and the majority of them and the restaurants are in a 2-3 block street of Michigan Ave.  Elkhart’s downtown working population is significantly smaller and spread out over a larger area.

As Elkhart works with SoMa to revitalize its downtown area, one thing that I believe would be beneficial would be to try and focus redevelopment in a small one block area and then move outward.  Create small dining district centered 1 block around the Lerner Theater.  Then find another entertainment venue a few blocks down Main St to provide another bookend to the Main St strip.  Density of business between the two would be greatest and other destinations can spread beyond.  Arts district can be focused in a particular portion of the downtown that is still easily accessible but a bit outside the major office and restaurant density.  That is obviously easier said than done and requires the local population to support and the great entrepreneurs the county is known for to invest in the area.  Downtown Elkhart has recently done some great things with improvements including street scaping, the plaza, the river walk and The Lerner Theater. To me, it really feels like there is great potential.  In the meantime, get out and support the businesses.

2nd Quarter 2014 Commercial Market Trends-Michiana

Newmark Grubb Cressy & Everett recently released their 2nd Quarter 2014 Commercial Real Estate Market Trends report for the Michiana Region.  Links to each are attached to this post but can also be found at http://www.cressyandeverett.com/

What does the trending show?  Generally good absorption of industrial vacancy in both St Joseph County and Elkhart County with Elkhart showing a need for good quality industrial buildings.  Several large deals occurred in the last quarter which should provide some momentum going forward in the next couple of years.

The South Bend Mishawaka office market also showed some overall positive absorption, though trends for lease rates and vacancy remains fairly constant over a few years.  If we are able to see continued growth in aerospace, engineering and distribution locally, we should see employment numbers improve and office absorption increase.

South Bend/Mishawaka Industrial

South Bend/Mishawaka Office

Elkhart Industrial